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Canadian Franchise Financing Loans ! 3 Things You Wish They Had Told You About A Business Franchise Loan

Guest post by: Stan Prokop

Article Overview: Information on how to successfully obtain a business franchise loan in Canada. Financing loans for franchising success . Use these key pieces of advice to make entrepreneurship a reality .

Canadian Franchise Financing Loans ! 3 Things You Wish They Had Told You About A Business Franchise Loan

If only I had known! That's one of our clients talking about a business franchise loan in Canada. The financing loans for franchising in Canada is often a major challenge.



Let's examine 3 key areas of the franchise financing dilemma and help you get to the goal line on what is surely one of most rewarding and sometimes daunting business journeys that you have been on.



And what are those 3 things you sure wished they had told you previously? They are as follows - there is a unique program specially designed to cover off the majority of franchise financings in Canada. Who knew! Secondly certain aspects of your franchise business can be financed, certain things can’t. You need to know what's what and plan accordingly. Thirdly... it’s all about that word plan, because if you are 100% prepared, with a basic package, your chances of getting a business franchise loan financing approved increase commensurately. We can pretty well guarantee that.



We have always agreed that a franchise purchase in Canada is a great way to balance entrepreneurial risk. The range of opportunities available to you seems to grow every day, and if you are working with the right people and the right institutions you're in a position to capitalize on that success.



We talked about the necessity to be prepared. There was a study done in the U.S. and we're pretty sure it mirrors the Canadian experience, that over 80% of loans to new small businesses ( that’s kind of what a franchise is , wouldn’t you agree ?) are declined only for the one reason that the applicant wasn’t fully prepared with respect to a quality package of basic information.



And what those business folks hear about how basic some of those requirements are it must be downright embarrassing to know franchise financing loans weren’t approved simply because you didn’t cover off the basics.



We also point out to clients that a business franchise loan in Canada can cover of purchasing a new turnkey location, and in fact can also pertain to financing an existing franchise within the chain you are focusing on. This scenario of course requires full co operation and disclosure from both the current franchisee as well as the franchisors permission for you to complete the transaction.



Many franchisees ' turbo charge ' their chances of financial freedom and progress by adding additional units to a franchise they already own, thereby building their own mini empire! All power to them of course. We do caution clients though that it’s important to set up separate legal entities for each of those locations from a view point of risk and accounting implications.



So, what can be financed, and what can't. Typically what are financeable in a franchise scenario are leaseholds, equipment, real estate if applicable, and items such as software of POS systems. What is not financeable, much to the chagrin of a lot of our clients is inventory, as well as the franchise fee, prepaid rents, consulting you may have needed, etc.



The Government CSBF/BIL program which is administered by the banks is your quick and accessible solution for franchise financing under $350,000.00. It works great for starting any new business, and rates, structure and other aspects of the program such as limited liability make it almost perfect for what you want to achieve.



So... if only you had known! But now you do. So speak to a trusted, credible and experienced Canadian business financing advisor for franchise financing loans that make sense and are achievable under your personal circumstances.

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Article Tags: business franchise loan, financing, loans



Related Forum Posts
how much for a franchise fee? - Dear Colleague There is no easy answer to this question. Things to consider: [list=] The sizeof the Franchise Clent base Expected Turnover Intellectual Property costs (recoup) Number of Franchises Number of employees Original Set up costs Franchise admin costs An example: A franchise that I was involved in setting was to a simple "lawn mowing/home repair" franchise. The Franchise included national/local advertising - preparation of client lists - general admin - central accounting etc The Franchise involved 300-500 clients - and an annual turnover of about $300,000 . The annual franchise fee was $30,000. Hope that this gives you some idea Take care Ian[/list]
Re: Enticing Franchises - Top 9 List - All Franchise listed above are in millions of dollars. Do you have the list of Franchise in thousands
Re: Info for would be franchisers... - [quote="Sebastien":1d29sdv1]Like Franchise Times, Franchise Update is a very practical magazine. There is no blah blah, just straight facts that anyone in the franchise community can relate to. I just want to mention that all these magazines are NOT franchisee oriented. I mean these magazines are for franchise professionals. If you're looking to buy a franchise, you won't find much information in there. To answer your question, getting published in Franchise Times was fairly easy. I don't want to brag too much but I think I am known in the franchise industry. I was the marketing guy at Franchise.com for a few years before joining my new company, the World Franchising Network. So people know me and I have a very good relationship with Nancy Weingartner, the Managing Editor at Franchise Times. I was talking with her at the last Franchise Expo South in Miami and she mentioned she'd like me to be profiled. I was like "ok, sure!". I like this franchise executive profile thing in Franchise Times as it is rarely BS. People are usually really natural in there.[/quote:1d29sdv1] Thanks for the follow up Sebastien! And I can't say that I'm surprised that networking with the right people and managing your relationships with them properly are the keys to being published. I guess the old adage holds true of "it's not who you know, but who knows you" that's important.
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: Franchise Surveys - Another good tool to researching a franchise is to speak with their existing franchisees. This contact information is included in most Franchise Disclosure Documents. In order to get a Franchise Disclosure Document or FDD as it is often referred to, you will have to complete a basic franchise application. The franchisor will then usually provide you with the FDD at that time. Included in that book of information is a list of the existing franchisees, the contract, the investment information etc... This information is required by Federal Law to be disclosed to your prior to making a purchase. So be sure to do your research and start with the Franchise Documents to get the initial information.


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