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7 Guaranteed Ways To Fail In Canadian Franchise Loans. Franchisee Financing Done Right !

Guest post by: Stan Prokop

Article Overview: Information on Canadian franchise loans. How does franchisee financing work in Canada and how can entrepreneurs avoid failure and guarantee success.

7 Guaranteed Ways To Fail In Canadian Franchise Loans. Franchisee Financing Done Right !



It's a given fact that some franchises fail. We all know that. We love providing guarantees to clients. But are there some guaranteed ways to fail. Nothing like a guarantee, right?



We're hoping that entrepreneurs considering franchise loans for franchisee financing in the Canadian marketplace take some of our advice, and by the way, that's on how NOT to fail!



Guaranteed failure point # 1 - Expect your franchise to either help or provide you with financing in Canada. That is a sure fire method of failure. While many franchisors have some relationships with certain organizations or financial institutions never forget that they are in fact in the business of selling franchises, not financing them. We will concede thought that lately we have heard rumblings of U.SS franchisors who are getting more involved in providing assistance and franchise loans for some of their units but we certainly haven’t seen any serious evidence of that in Canada.



So if you cant rely on your franchisor to provide you with financing assistance ensure that you have access to experience and relationships that can in fact assist your with completing your finance plan around your purchase. And while your franchisor may ' point ' you to some financing that may assist you it's safe to assume there are no guarantees.



Guaranteed failure point # 2- Don't explore your options. Another great way to fail... not recommended though! While the options to finance your franchise in the Canadian marketplace are certainly not abundant they do in fact exist if you are armed with the right knowledge and contacts. Never ever assume that you have to finance your purchase through your own bank, in fact some banks publicly or privately stay away from certain industries, and hospitality is an example. And that’s not good news for the thousands of entrepreneurs that want a part of this industry! So, take the proverbial advice of ' shopping around' for either a franchise financing expert or an institution that understands and is committed to your success.



Guaranteed failure point # 3- Borrow more than you can afford for your franchise. Another great way to ensure non success! Remember of course that the people providing franchise financing actually expect to be paid, in full! Larger loans translate into larger payments and cash flow concerns, so ensure that your financing has a proper mix of debt and your own equity. Remember that the optimal financing allows your business to succeed, grow, and pay you salary while building owner equity.

Guaranteed failure point # 4- Pick any franchisor... after all they are all proven business models, right? Well, not really. There is downside to any business, and certain industries and markets fall in and out of favor over time. So carefully assess your opportunity from both of course the financial perspective, as well as the overall market perspective. Your franchisor can be a Canadian organization, or a licensee of a U.S. company. Use the franchising disclosure laws in Canada to properly do your due diligence.



Guaranteed failure point #5 - Skimp on your financing. Borrow less, so you won't have to repay as much... right. Wrong! Don't cut corners when it comes to franchise loans and franchisee financing for your Canadian business. Understand your costs, and remember that you need to focus on two areas, purchasing your business, and then growing it. A proper combination of long term debt and working capital is needed. Don't let the excitement of owning your own business cloud the financial realities of what it takes to be successful in any business, franchising included.



Guaranteed failure point # 6- Assume sales are profits. Guess what? They are not. Build a proper business plan and ensure you have a solid handle on cash flow. An experienced Canadian business franchising advisor can help you here.



Guaranteed failure point # 7- Assume you know how to finance a franchise, or that it is easy. It's not necessarily the case. Understand your financing options, which in Canada exist, but are somewhat limited. Negotiate a fair price for your chosen business. Terms and rates in franchise financing vary, whether you are using 3rd party independent financing or the BIL franchise loan. As stated previously, borrow the right amount you need, whether you are purchasing a new unit or buying an existing franchisee out.



So there you have it. 7 guaranteed, yes guaranteed ways to fail at franchise financing. And by the way, we want you to succeed! , not fail, so speak to a trusted, credible and experienced Canadian business financing advisor who can help you with franchise loans and franchisee financing in the Canadian market space.

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Article Tags: canadian, franchise loans, franchisee financing



Related Forum Posts
Protecting IP - Dear BigJim 22 Sure as long as it is in the Franchise agreement... ie wht you are offering as Francisor and what their obligations are as Franchisee It is all in the agreement........ take care Ian
grants for restaurants - Well friend I don’t have any idea about government grants for restaurants, but I will recommend that you may try on some banks who offer loans for small business where the government will have some guarantee. Beside that Restaurants business is very risky so some of banks who gave some Financing Loans they will look at on it if there is enough solid business plans.
New Small Business Topic - Hello everyone, I'm on the lookout for new topics to add to my site. We just launched a Franchising section and are planning Human Resources section. Do you have any thoughts for a new section? Here's a list of what we currently have: Angel Investors Branding Bank Loans Business Coaching Business Plan Franchises (New) Insurance Legal Marketing Public Relations Sales Small Biz Loans Venture Capital
re: restaurant start-up - I'm not sure about government grants for restaurants, but my recommendation would be to approach a lender that offers loans under the Canadian Small Business Financing Loan program where the government will guarantee 85% of the loan. You can borrow up to $250,000 to finance equipment and renovations under this program. Restaurants are very risky business, however some of the Chartered Banks will look at restaurants if there is enough of an initial equity investment and you have a solid business plan (experienced management team, good concept and strategic location).
Re: Enticing Franchises - Top 9 List - All Franchise listed above are in millions of dollars. Do you have the list of Franchise in thousands


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