Business Franchise Loan ? The Before And After Of Franchising Finance In Canada

When You Finance Your Franchise It Doesn’t Have To Be Gut Wrenching !

OVERVIEW – Information on the business franchise loan in Canada . Franchising finance offers different challenges in Canada prior to and on approval of your business purchase




Business franchise loan challenges. When it comes to financing a franchise in Canada there's some critical ' before and after ' issues that need to be address. When they aren’t addressed properly the situations becomes... shall we say ' gut wrenching'! We'll examine some of those key points. Let's dig in!

Your initial decision to purchase a franchise should always be tempered with the amount of funds that you can personally invest in the business. These day's those funds come from savings, equity lines of credit, and in some cases corporate severances.

Knowing the amount that you can comfortably commit to the business will play a key role in both the size of franchise you buy, as well as the financing you can arrange in this somewhat specialized field. Frankly, in Canada franchise funding comes from the smallest handful of resources - a specialized franchise finance firm, a bank loan, and some ancillary financing services such as equipment finance, leasehold finance, and merchant advances when it comes to working capital needs.

We reference banks, but by far the amount of financing that the Canadian banks deliver is through a vehicle known as the BIL/CSBF loan program. It's the government program that over time has become the de facto vehicle to finance many of the franchises in Canada. Challenge arise when you are purchasing a service franchise as the BIL program is tailored more specifically to assets and leaseholds and real estate on some occasions.

Can the size and quality of the franchisor you are working with affect your business franchise financing success? To a certain degree the jury is always out on that one - suffice to say that some franchises are viewed as a bit more risk or somewhat more or less successful than others .

Also, as a point, when a franchising loan is under consideration in Canada it in fact does not make a real difference if your franchisor is Canadian, U.S. based, or in some cases you might simply be working with a Master Franchisee who has purchased the rights to your overall territory.

Your business plan and cash flow document are critical to finance success. In fact while the business plan is needed before you start your franchising process it can become a key valuable document in benchmarking your success down the road as compared to your original aspirations /projections.

Personal finances are a key part of the overall franchise finance process. You will need good reasonable credit history for your borrowing , and you will want to ensure that in your financial due diligence you assess the fact that your business will generate cash flow and profits that will allow you to draw a decent income based upon your needs .

When it comes to the franchising loan you want to ensure that your finance package addresses both the needs of the lender (i.e. repayment of your loan) as well as your ongoing working capital needs. Financial projections we see from clients are often not realistic, which can create some serious ' start up ' problems when it comes to financing on going operations.

At the end of the day the whole business franchise loan process requires both a ' before and after ' approach. Careful planning and utilizing guidance from your franchisors experience will get you to the goal line.

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with franchising finance needs in the Canadian marketplace.



Stan Prokop - founder of 7 Park Avenue Financial –


http://www.7parkavenuefinancial.com


Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :

7 PARK AVENUE FINANCIAL = BUSINESS FRANCHISE LOAN FINANCING



7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653
Email = sprokop@7parkavenuefinancial.com














Stan Prokop

Creative Ways for Franchise Finance In Canada. From IT Franchises To Restaurant Franchising Here’s How !

Avoid The ‘ Wait & Hope ’ Of Franchising Finance In Canada


Information on franchising in Canada . From IT franchises to a restaurant you need a clear franchise finance success plan




Franchising Canada. Whether it’s an ' IT ' franchise in the world of technology, or a restaurant in the quick service / full service/ casual service industry everyone it seems wants to get on board. If they know they have the ability to finance the business...so let’s examine some creative ways in which to complete the financing of the entrepreneurial dream.

It's no secret to the potential franchisee that it's all about cash - a combination of your own and borrowed funds. What are some of the methods that clients use to creatively, yet sensibly finance the franchise dream in Canada.

Every business in Canada, new or existing, has two components to the capital structure. Debt... and equity. Equity is of course your portion; debt is of course that contributed by your lender or lenders. And remember, you have the upside potential in equity... your lender has only the interest income, and the hope and belief that they will be paid in full.

That's one of the reasons that many franchisee ' newbie’s' in fact get overly enamored with the financial potential of their business when pitching a franchise finance scenario. We think they would do better often to tone it down a bit and focus more on the lenders ability to feel comfortable that cash flow will cover the loan or loan payments.

In talking to clients over a long period of time we've been intrigued by the manner in which customers come up with their portion of the funds, the equity. Sometimes it's savings, other times they are leaving corporate life and utilizing their severance from the previous employer.

In other cases there is ' friends and family ' - we see that a lot. In order to be truly creative in using funds from friends and family (it hasn’t escaped us that they are in fact your ' angel investors;) you need to be sure these funds arent documented as formal debt - otherwise your banker or lender will have to show this on your personal balance sheet as debt, which will affect some of your borrowing ratios.
Supplementary to this strategy is getting a minority operating or silent partner in the business. Giving up a small amount of equity, say 5-10% might induce a family member or third party to help you out.

Typically the collapsing of registered savings plans is viewed by most as not, we repeat, not the best way to finance a franchise. Two reasons here actually, one is the huge tax bite involved in such a move; the other is simply that you have put your savings at risk, which clearly is not optimal.

Other creative ways to compliment franchise financing in Canada are to consider supplementary forms of financing such as equipment lessors for certain assets, or merchant receivable firms for ongoing cash flow. They are complimentary to your overall finance strategy.

Is there one way to really move along quickly in franchise finance in Canada? How about a co- signer, and boy do we have one for you. It's the government of Canada, via Industry Canada’s BIL program, with the government in effect guaranteeing a huge portion of your loan in the franchising Canada environment. Don't overlook that one!

So, a service franchise, such as in the IT (information technology) industry, or a restaurant... it’s your call when it comes to selecting and finalizing the franchise dream. Just make sure you have considered all options, traditional and alternative when it comes to ' creative ‘.

Speak to a trusted, credible and experienced Canadian business financing advisor for franchise finance advice that gets you to the goal line of success.







Stan Prokop - founder of 7 Park Avenue Financial –


http://www.7parkavenuefinancial.com


Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :


http://www.7parkavenuefinancial.com/franchising_canada_it_restaurant_franchise_finance.html

Is Canadian Franchise Financing A Do It Yourself Project? Franchising In Canada With Success

Canada Franchising Opportunities Can Be Your DYI Success Story If Financed Properly ! Information on Canadian franchise financing . Canada franchising opportunities can be financed on your own , with the right strategy and advice. There seems to be a lot of ' DYI ' out there today, that being the acronym for Do It Yourself of course. So we were thinking, is it possible that Canadian franchise financing for the purchase of your chose franchising endeavor in Canada is a ' DYI ' project? Let's talk about a lot you can do on your own, (as part of that ' dyi ‘) and we'll also focus in on some key areas where expert assistance is highly recommended! Our focus is of course on financing that franchise; we're assuming you have already picked your business of choice. A solid first start is to have a realistic discussion with your franchisor around their knowledge and assistance in the area of helping your franchising project in Canada. It's the policy of some franchisors, certainly not all by the way, to develop financing guidelines for their units. This might be in conjunction with a preferred program via a financial institution, or, as importantly, their own experience in levels of investment, capital, and working capital to acquire, run, and of course grow the business. If there is one caveat here we simply say to clients that you should not infer any sort of guarantees that your financing loan or package will be approved simply because a program exists that you might potentially fit into. Our own experience though is that certain financial institutions target many successfully larger franchise chains and will go out of their way in ways we can't mention to get a transaction completed on your behalf. (Think hockey/donuts as an example! enough said!) Getting back to DYI though, a business plan, either prepared by yourself or with input from you is critical. This can easily be accomplished with help from the franchisor, your accountant, or an experienced Canadian business financing expert in the area of franchising in Canada. We forgive clients for thinking they are out of their league in prepared a business plan and cash flow, but it's not as hard as you think. The reality is that if you can help prepare and understand and present a plan your chances of financing approval increase significantly. DYI also can be taken in the context of looking at your own personal investment in the business. Your choices are of course 100% outright cash purchase (not recommended by us), 100% borrowed funds (not recommended, and oh by the way, impossible!), and the real world solution, an investment by yourself with some real world franchise financing for the balance of your purchase. DYI with respect to your owner equity is anywhere from 10- 50% per cent in Canada. Franchisees should spend part of their DYI time in assessing their personal net worth, their liquidity, and how they will raise and contribute their portion to the franchise investment. We've shown that a good part of your Canadian franchise financing journey can in fact be a DYI process. Where you win big time is by using, where necessary the services of a good accountant, franchising lawyer, and an experienced credible and expert Canadian business financing advisor to complete your purchase successfully, under terms that make sense for your situation. Stan Prokop - founder of 7 Park Avenue Financial – http://www.7parkavenuefinancial.com Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing. Info re: Canadian business financing & contact details : http://www.7parkavenuefinancial.com/canadian_franchise_financing_canada_franchising.html