Finance Your Franchise
By Sarah O'Connor
Finding a way to finance your franchise is very important. You may have found great franchise opportunities but did not have the money to buy into one. Don’t let history repeat itself: plan ahead to finance your franchise. Virtually anyone with good credit and good business sense can get financing. You just need to know how to get a good proposal for financing in front of the right person.
First, you should draw up a complete business plan. The plan should include the product or service that you wish to sell, how you will produce the product, how you will market the product, and the total costs that you expect to incur.
After you’ve completed the plan, you need to think about finance options. Keep in mind that regardless of who you are approaching for the money, you have to sell yourself and your business. Have a “sales presentation” ready to go. Make sure that your business plan and finance proposal are detailed and structured. Be sure to include your projected income from the business and the projected expenses for the first three years.
You need to have the correct balance with the complete details. If you have any credit problems, clear them from your record. Some franchisors will offer a loan for the full amount and others will carry a part of it and find another lender for you to finance the rest.
Two of the main objectives of franchises are to expand operations while increasing profits and to continue to increase capital. Big corporations my use techniques like shoestring or borrowed money. You can also think about asking friends and family members to loan you money and provide them with a copy of your expected profits and expenses.
Second mortgages on a house or other existing assets are another way to finance your franchise. Placing a second mortgage on your home is a big decision so think it over carefully. Remember that all business ventures carry with them some risk and sacrifice.
You may also decide to seek financing for your franchise through a commercial bank. Banks provide investment loans for all types of businesses. To find one, look through the yellow pages of your telephone directory, call the number listed, and ask for an appointment. Even if the bank is unable to help, they may be able to provide you with a list of businesspersons who might be willing to provide financing. Banks also sometimes conduct lectures and seminars on investments that you can attend and learn from.
Consider the risks involved when you plan the financing for your franchise and take professional advice whenever possible.
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