Franchising Loans In Canada : This Is How You Finance A Franchise

Don’t Miss The Golden Age

Of Franchise Opportunities Due To Financing – This Is Gonna Be Good!




OVERVIEW – Information on franchising loans in Canada. When it comes down to how to finance a franchise the right information and expertise guarantees entrepreneurship success.





When it comes to how to finance a franchise in Canada the ability of the franchisee to complete that process successfully allows him or her to enter an industry that for all intents and purposes is... booming! We suppose we can even call it the ' Golden Age ' as a huge portion of today’s economy is in fact derived from the franchise industry itself. Let's dig in.

Only two types of financing best address funding a franchise. It boils down to either a specialty firm that funds this type of venture or a Canadian chartered bank that participates in , again, ' specialized' financing such as Canada's CSBF program - which is often perfectly suited to complete the financing required in assets such as equipment and leasehold improvements.

We should mention also that it is very possible to finance a franchise purchase for an existing franchise - with the two caveats being that of course the franchisee will want to determine the true motives for the existing franchisee wanting to sell the business ; as well as obtaining the required permission and approval from the franchisor.

Again in both of the above cases specialty franchise finance and bank financing are potentially available to complete the transaction.

As with any time of business financing in Canada a solid loan package must be evident for franchising loans to be approved based on your requirements. The typical loan package should not seem like a daunting process - it’s essentially info about yourself, your business, and your prospects.

Included in that ' loan package’ will typically be the following:

Personal financial data - i.e. net worth, credit history, etc

Business Plan

Cash Flow

List of items to be financed - (this should be broken down into several categories, including items to be financed by the owner, assets, leaseholds, franchise fees, etc

Note also that careful attention in the business plan and cash flow should be paid to repayment of the loan, future financing needs, and the amount of owner capital being put into the business.

We often are asked by clients if the reputation or size of the franchise is a key factor in financing approval. On balance we can say that is not necessarily the case and certainly if your franchisor has an existing portfolio of corporate or franchisee locations that is successful size clearly ' doesnt' count!

One technical point is that ' service ' franchises are very difficult to finance since they have little need for hard assets, leaseholds and are often cash based businesses. A good example might be a Home Inspection franchise.

Franchising loans should be tailored to individual needs, as that relates to term of the financing, rates, repayment, external collateral, etc. When it comes to external collateral, unless you are financing the venture predominantly on your own both a specialty franchise firm, or a CSBF loan will typically require no external personal collateral - i.e. mortgages on your home, security deposits, etc.


Franchising in Canada is experiencing tremendous success. Prospective Franchisees considering this entrepreneurship option should seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can assist them in how to finance a franchise properly to ensure maximum chances of growth and profit success.



Stan Prokop - 7 Park Avenue Financial :


http://www.7parkavenuefinancial.com


Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 - Completed in excess of 90 Million $ of financing for Canadian corporations . Info /Contact :

7 Park Avenue Financial = Canadian Franchise Financing Expertise





Have A Question /Comment On Our Blog Or Canadian Business Financing Alternatives ?

CONTACT:

7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8


Direct Line = 416 319 5769

Office = 905 829 2653


Email = sprokop@7parkavenuefinancial.com


' Canadian Business Financing with the intelligent use of experience '

Stan Prokop

Business Franchise Loan Challenges ? Here’s How Franchising Loans Really Work In Canada

Professional Tips on Franchise Finance In Canada

OVERVIEW – .Information on the business franchise loan in Canada. What You need to know about franchising loans for entrepreneurial success in this industry



Business franchise loan challenges in Canada? We're the first to admit that the concept of getting a ' tip ' in business is not always a good thing but we’re drawing from successful experience in franchising loans that assist clients who are serious about entering this type of business.. and being successful!


There is of course a long journey between the time you decide to purchase a franchise to the time that ribbon opening! Along the way you have been vetted by the franchisor, investigated and researched your purchase decision , probably spent some time in training and orientation, and... Oh yes, we forgot... faced the finance challenge of buying the business!

Many franchisees either struggle or are uninformed about how much equity, aka ' down payment ' they have to put in the business. We forgive them for this confusion because it’s a three pronged issue -

1. How much capital the owner can comfortable raise or put in

2. How much equity capital is required by the type of financing you ultimately enter into?

3. How much capital in some cases that the franchisor insists on as a prerequisite to entering into their program - typically that amt. is one to listen to carefully as its often based on the franchisors experience as to what it takes to be financially successful, not just ' sales and revenue successful '!

While Canadian chartered banks have in essence recognized and embraced the franchise industry as a key borrowing segment it is very important to note that almost never to they finance franchises directly - even less so when it's not an ' asset heavy ' deal . So what our banks do is to carefully tailor some large national programs around the franchisors willingness to work with them in a worst case scenario - i.e. The financial failure of your business!

If you are fortunate enough to acquire a business that’s a part of a very large and successful respected chain you should be congratulated and might find some financing solace. If that is not the case one of the best possible solutions for your financing decision comes from an acronym. And that acronym? It's the BIL loan program which hundreds/thousands of franchisees use to facilitate the financing of their franchise if the purchase price is under 350k - which is the program finance cap.

Whether you are borrowing from a specialty franchise lender (yes they do exist) or from a bank or commercial finance firm it’s important that the franchisee demonstrate reasonable personal financial history. That of course means that you can demonstrate that you have run your personal finances in a manner that reflects how you would run your franchise.

Lenders and even the franchisors themselves can easily verify your personal financials via credit bureau reports, statements of personal asset, etc.

Understanding the up front challenges of franchising loans will save you time, money and ultimately guarantee financing success. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your business franchise loan needs.





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 = CANADIAN BUSINESS FRANCHISE LOANS


CONTACT:
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

Franchise Funding Options Not A Cinch? Franchising Loans May Not Be As Tough To Get As You Thought

This Is What Happens When You’ve Got The Right Information on Franchisee Finance Options


OVERVIEW – . Information on franchising loans in Canada. How does the entrepreneur know he or she has access to the right franchise funding options that are available in the Canadian marketplace




Franchise funding options in Canada. At certain points many potential franchisees in the Canadian marketplace get the feeling that this is a bit tougher than they thought! So success in this area revolves around the right information and expertise when it comes to franchising loans that are available, and make sense.

In some cases you're simple the ' newbie - a first time franchisee that’s looking to funding for the entrepreneurial dream of owning your own business. In other cases you might actually already own a franchise and want to expand.

Top experts in the field tell us that the majority of the franchises out there and there are tens of thousands do in fact make money. As a result there are in fact lending and financial resources available for reputable franchises with solid owners with good overall business experience.

Key to understanding the financing challenge is the recognition that you as the business owner must have a financial commitment in the business. So it is therefore very unreasonable to both expect and assume that you will ever receive ' 100% financing ' on your purchase. We would hasten to add though that many franchises in Canada are financed under the specialized ' BIL ' loan program , and that financing requires only a 10% permanent equity contribution , although we can discount the need and requirement for working capital as the business starts and grows.

Term loans tend to be the most utilized method of financing a franchise - they can range anywhere from 3-10 years depending on the provider. Naturally it goes without saying that you have to have the ability to demonstrate a premises lease and a franchise agreement that backs up the loan amortization!


The basic initial requirement of any business financing and it certainly is the case for franchisee finance is that you need to demonstrate a solid business plan and financial forecast. If you need help in preparing one numerous avenues of assistance are available.

There are 3 basic categories of franchise lenders in Canada. They are the specialty lender. the banks (more on that in a moment), and miscellaneous commercial finance firms that provide different levels of assistance in some but not the total financing need. These might inlcude equipment lessors and working capital specialists.

Franchise owners tend to get their initial equity contributions from savings, family and friends, or via a partnership type arrangement. In general we can safely say that the franchisor itself is not interested in providing financial assistance, so almost always never count on that!

We referenced ' banks '. While banks in general will not finance a franchise directly under a start up term loan thousands of franchises are in fact funded through the BIL/CSBF loan that banks administer and run for the government. This is, on balance, a great source of financing for any start up, franchises included. In certain very specialized industries banks might in fact run a program directly with a franchisor - these franchisors have to be the crème de la crème of the franchise industry . (Think ' hockey and donuts!)

In certain cases you might be looking at the concept of ' refranchising ‘, namely buying from an existing franchisee in your chose franchisors network. There some solid reasons to look at this method of entering franchising:

Customers and financial performance can be documented

Staff and procedures are already in place and hopefully working!

It's much easier to determine financial performance, profits, growth prospects, and asset values.

As in real estate, you may even get a deal with that ' motivated seller'!


So, bottom line? Simply that armed with the right information and expert assistance the franchise financing challenge might not be as tough as you thought. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with franchise funding options expertise.



7 PARK AVENUE FINANCIAL = FRANCHISE FUNDING OPTIONS


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 :


http://www.7parkavenuefinancial.com/franchising-loans-franchise-funding-options-2.html





CONTACT:
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

Is There A Secret To Buying A Franchise Business When It Comes To Franchising Loans And Cost?

Financing Your Canadian Franchise Opportunity


OVERVIEW – Information on franchising loans in Canada. Factors critical to franchise cost and finance when buying a business opportunity in the franchise industry



Buying a franchise business in Canada. Talk about a commitment that requires a combination of logic, perhaps some luck, and some common sense around the type can cost of franchising loans.

Franchising is so popular today that opportunities are available at every price point, and with that comes varying costs - from a few thousand dollars of investment required... all the way up to Million dollars ++.

As consumers we certainly don't buy thing we can't afford, and that logic should clearly be carried over when it comes to a franchise purchase. Notwithstanding the fact that franchising loans and financing are available to those that qualify it becomes a question of risk, return on capital, and your ability to make an equity contribution to the business venture.

Having both a realistic business plan that properly shows cash outflows and inflows at the start of the business is critical. And quite frankly that’s the same methodology and logic you would use to acquire any other business, franchise or not! Being able to demonstrate a realistic profit and cash flow to your lender is always critical.

What are then some of the key factors that come into the financial aspect of the purchase? (We’re going to assume you are over the hump when it comes to all the emotional aspects!)

Every business purchaser assesses the cost of buying a franchise business when it comes to return on your initial investment. We constantly hear that an investment in the franchise industry requires a major investment of time when it comes to ' who's minding the store ‘. So don't forget to factor in both the cost of the franchise as well as the amount of time and expertise you have to invest to make the business successful and grow.

Part of the franchising cost is of course the initial franchise fee. In general that fee is not financeable, and is often shown as ' Goodwill ' on your balance sheet. So more often than not we advise clients that they need to cover off the franchise initial fee as part of their initial equity investment into the business.

Franchise royalties vary in Canada - they typically seem to be in the 6-8% range and need to be carefully factored into your busines plan and cash flows as they significantly impact cash flow and profits.

Timing. There isn't a day when we don't speak to a potential franchisee that needs to have his or her financing arranged - yesterday! You need to be in a position to allow for a reasonable amount of time to put your whole financing plan and package/strategy together. Working in panic mode with a lender basically ... never works!

Franchisees address the opportunity to own their own business in a number of ways. Some actually end up paying cash, some choose a partner, and larger opportunities actually have the ability to acquire an equity investor. Is any one of these better than the other? Not really, although we would add that paying full cash for your purchase certainly depletes personal equity and net worth. By incorporating your business and financing it properly you are clearly addressing the issue of matching risk and liability properly.

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with a proper strategy for the cost and type of franchising loans and finance you need to be successful.

7 PARK AVENUE FINANCIAL
CANADIAN FRANCHISE FINANCING EXPERTISE

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_loans_franchise_cost_buying_business.html