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5 Franchise Business Financing Tips for Entrepreneurs in Canada
| Guest post by: Stan Prokop |
Article Overview: Make franchise financing work for you;Information on how entrepreneurs can accurately assess and address their franchise business financing needs for a successful endeavor in the franchise financing arena . What you need to know to make the franchise financing process work for you.
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5 Franchise Business Financing Tips for Entrepreneurs in Canada
Expert advice is always a good thing - so wouldn't it be great to get some solid advice on one of the larger decisions you'll make in your business life - buying and financing a franchise in Canada. Franchise business financing is specialized and you want to ensure you have the proper ammunition to make the acquisition of your business successful. And that means of coruse a new turnkey franchise, or, in some cases, the purchase of a franchise from an existing seller or franchisor.
Let's explore 5 key tips that should ensure your business financing success - they are as follows -
Pick the right franchise finance partner
Ensure the type of financing offered meets your needs
Don't count or rely on the franchisor itself for financing - that rarely if ever happens
Understand franchise lending criteria in advance, and then ensure you can qualify for those criteria
Ensure your franchise is financed for purchase as well as ongoing needs
Let's walk through some of the key points in those 5 tips - allowing you to feel more comfortable about the franchise financing process.
In Canada franchise financing is broadly available and at the same time very boutique and specialized in nature. What do we mean by that statement? Well the majority of franchises in Canada are financed under a special government program called the BIL or CSBF program. It is underwritten and supported by the government, but in case you haven't seen a government franchise financing office on your corner, here's the deal on that! The program is administered by Canadian banks, but under the government auspices. We tell clients that only a limited number of Canadian bankers understand the program, can move through it efficiently, and get you approved.
We mentioned a key point in our Tips that indicated you must understand the criteria for both the above mentioned program, as well as other financing available. We advise clients that general criteria for a franchise loan are as follows : decent personal credit history , a respectable down payment ( more about that later ) , some industry experience in the type of franchise you are purchasing, and you must be a Canadian citizen or landed immigrant - bottom line - can you legally borrow in Canada . Broadly speaking satisfying those criteria should allow you to get out of the gate quickly and commence your franchise financing process.
That brings us to another tip we noted, who exactly is your franchise finance partner. For a starter, given the unique nature of franchise financing we recommend you work with a trusted, credible and experienced franchise financing consultant. He or she will guide you through the finance maze and make you aware of all issues and conditions on an up front basis.
Secondly, don't count on your franchisor to provide financing - they like selling franchises, not borrowing on their own account to get you started. Having said that a good franchisor will give you guidance on their own chains experience in how their franchisees are typically financed. Alternative to the bank franchise finance program sponsored by the government are a handful of specialized financed companies. We also have actively recommended working with equipment financing firms to finance some of the hard assets in your new business. That rounds out the strategy quite nicely.
Purchasing the right franchise and getting it financed is job 1. Job 2 should be ensuring that you have ongoing financing needs covered for things such as working capital, additional equipment or assets that might be needed down the road, staff and sales expansion, etc. You can address this most properly by carefully tuning your initial business plan to ensure that ongoing sales and costs can be financed properly.
Make sure the business can support any debt that you take on at a future point in time.
If you cover off carefully our 5 'Tips' you are well on your way to entrepreneurial success in franchise financing in Canada.
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About the Author: Stan Prokop RSS for Stan's articles - Visit Stan's website Stan Prokop is the founder of 7 Park Avenue Financial . The firm specializes in business financing for Canadian companies in the areas of working capital , asset based lending, SR & ED tax credit financing, equipment financing, franchise financing and banking .
Click here to visit Stan's website   Why Asset Based Lending is the Business Credit You Will Ever Need Inventory Loans Financing Inventory Assets Equipment Leasing Canadian Solutions Financing Your SR ED Tax Grant in Canada Your SRED Financing Solution Asset Based Lending Grows in Popularity in Canada |
Related Forum Posts
canada resources
- I used to have a connection to a franchise consultant in Canada at "Franchise Officer" in Toronto. I wish I could remember his name ( but I can check my files at the office tomorrow). Anyway, he had a lot of connections to banks in Canada. He may know of them and may be able to offer some feedback.
If you are looking for a business loan, Canada has similar business loan programs to that of the USA's Small Business Administration (SBA). I think its SLBS in Cananda, and I probably have the list of it's lenders in my office also.
Do you think either can be helpful? If so, I can get back to you with this information tomorrow. Let me know!
Re: Hello EvanCarmichaelers, and Thanks!
- "Carmichaelers" ..nice.. Over at the Young Entrepreneurs I'm going to start calling my readers "DSilvelers" - I like the sound of that!
Welcome on board theFranchiseMarket. Do you run a Franchise Business or are involved in Franchising in anyway?
Business Tips
- How about:
Tips for managers to handle employees more effectively?
Tips on how to deal with difficult customers?
Tips on how to deal more effectively with suppliers?
The only three I have in mind right now, but will try to come up with something else.
Chris
BDC
- [quote="IWDCanada":jib6tqt9]I think if you try to do business in the Maritimes the Business Development Bank of Canada might be able to provide grants.[/quote:jib6tqt9]
On that note, does anybody have any experiences with the Business Development Bank of Canada that they would like to share? I have been considering approaching them for a business loan.
Clothing Niche
- Yasunori, can you dig deeper into the clothing niche? e.g. Business Casual for people 6ft and taller (men only, women only or both).
Victoria Secret is big in Canada because they don't have retail Stores here and the only way to get their product in Canada is thru online purchases. They have a great Hassle-free return policy too.
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