The cost of buying a franchise can be substantial, but you don't have to be a trust fund baby to get into the franchise of your dreams. Where is the funding going to come from? That's the number one question franchise buyers ask. There are numerous sources of capital, but start with these basic steps first.
1. Talk to the franchisor. About one in three franchisors provide financing directly or have arrangements with third party lenders. You will find any financing arrangements spelled out in Item 10 of the UFOC. Even if the franchisor doesn't have money to offer, it is still the best source of information about your financing options.
2. Look within. It is a common misconception that you can or should borrow all the money to open a franchise. Be prepared to come up with at least 25 to 30 percent of the total start-up costs. To assess personal resources, start by preparing a personal financial statement (you'll need one to present to lenders anyway).
3. Ask family and friends. This is one of the most common ways to finance a new business. After all, who knows your dreams and capabilities better? Plus, they want to help you succeed.
4. Call your accountant. Ask your accountant to recommend a banker. A good accountant - one with small business experience - is usually a great source of leads.
5. Find a specialist. You should start at the bank where you do your personal banking, but there's a good chance you won't get what you need there. Local banks are often unable to fund franchise projects. Your chances will be much better with independent lenders like GE Capital Franchise Finance that specialize in franchise lending.
6. Search the SBA Franchise Registry (www.franchiseregistry.com The SBA's small business lending guarantee program is a key source of loans. This program for new franchise buyers is much easier to access since the creation of the Franchise Registry, a central database of information about franchisors that have been certified by the SBA.
Finding the Money for a Franchise - To learn more about this author, visit Mary Tomzack's Website.
Like this article? Share it with your friends
 |
Related Articles |
|
 Steps to a Successful Franchise Experience
|
| |
Finding and exploring a franchise opportunity can be stressful. Finding the right franchise for your goals and objectives takes diligence and focus. Many prospective franchisees don’t even know where to begin the ...
|
|
Franchising with all its Success
|
| |
This article shows point on why franchising is a better business venture.
|
|
Looking for Franchise Finance? You May Be Sitting On It Already
|
| |
IRA and 401(k) can be used effectively to buy a franchise, but you must be very clear about the pros and cons of it. Though it’s tax deductible, but if you lose money by any chance, recovering the money at an advanc...
|
|
How to spot a solid franchise opportunity
|
| |
What should you look for when looking for a franchise to buy?
There are a lot of franchises out there, and a would-be franchise owner needs to be able to differentiate between a good opportunity and a potential ...
|
|
How to find the best franchise opportunity for you!
|
| |
Before you make any decision to invest in a franchise, sit yourself down and analyze your needs, capabilities, and limitations in relation to a franchise business. Be careful not to fall into the trap of deciding to...
|
|
|
Mary Tomzack
(Visit Mary's Website)
MARY E. TOMZACK is the President and
Founder of FranchiseHelp, Inc. She is a
noted franchise expert and the author of
Tips & Traps When Buying a Franchise
(First publication,1994,McGraw-Hill; new
and completely updated, revised edition,
1999,Source Book Publications). Ms.
Tomzack is often interviewed for franchise
articles in publications such as The New
York Times, "Franchise World" and
"Entrepreneur Magazine."
Reach her at (914) 347-6735 or at m
tomzack@franchisehelp.com or co
mpany@franchisehelp.com
|
|
|
|
![[Get Copyright Permissions]](http://license.icopyright.net/images/icopy-w.gif){kind=small}
