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Franchise Funding and Financing Options for Franchisees In Canada

Guest post by: Stan Prokop

Article Overview: Information on franchise funding in Canada . What financing options are available for franchisees who which to properly finance their franchise investment and what type of help is available . Canadian Franchise Financing Options

Franchise Funding and Financing Options for Franchisees In Canada

As a new potential franchisee in the Canadian franchise industry you want, and need! ... some basic info around how franchise funding works in Canada. Those financing options may be critical to your overall success as a new entrepreneur in your chosen industry.

Ironically experts tell us that one of the main reasons that people don't go into the franchise arena as independent business owners and entrepreneurs is because they feel they either did not have or could not raise the funding for the business.

Naturally in the current tough ( but getting better!) economic environment start up capital for any business is a challenge - so having access to the best information and resources around franchise funding is clearly a major key to success .

It kind of all starts with a business plan , we meet with many clients who have initially been refused for franchisee financing for the very simply reason they weren't prepared and the reality is you don't get a lot of chances in financing a new business when you are unprepared .

If you aren't able to prepare a proper plan yourself you can speak to a trusted advisor in Canadian business franchise financing and one can easily be prepared for you - it's all about working with an expert. The key part of any business plan is that you can present your financials properly - which simply means what sales you feel you can achieve, what your expenses will be, and what projected profits will be . A key element of all that is your ability to generate cash flow to repay your franchise funding loans - which makes perfect sense - from the lenders perspective of course!

Your plan has to be presented properly and you should be able to anticipate any questions the lender will have about your experience, how you will run your business, what other resources you can bring to the table, etc.

It's not always about size in life, but in this case we do advise clients that the larger your franchise financing requirement is - well you should be expected to have a more detailed proposal and plan.

Franchisees in Canada may not be aware that their biggest ally Vis a Vis a financing option for their new business is the Canadian government! That tends to floor our clients when we share that info with them - but the reality is that the majority of the financing in Canada for franchisees revolves around a government sponsored loan that is formally called the BIL or CSBF loan program. It is underwritten by he government, but administered by the banks in Canada

Rates for the above mentioned franchise funding and loan program are very competitive and there are some key requirements you should have ready when you submit your proposal for consideration. And by the way, OPM does not work in franchise financing in Canada - that being the acronym for other peoples money! We are always explaining to clients that the funding of their business comes from two sources, the loan or loans, and their own personal equity injection - so you must absolutely be prepared to make a personal equity investment in the business.

How much of your own equity is required - that can be calculated by simple formulas pertaining to the amount you have to borrow and your ability to meet debt to equity ratios and working capital solvency .

There are some great franchise opportunities in Canada. Investigate your financing options with a trusted, credible, and experienced Canadian business financing advisor who will work wit you as a potential franchisee to achieve business financing success.

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Article Tags: financing options, franchise funding, franchisees



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: 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.
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]
Why pay a Consultant? - Consultants can bring you into contact with a Funding Source but how do you tell whether a consultant will be successful beforehand? Professional Consultants ALWAYS ask for some kind of retainer so that they can feel they're not being used by a 'chancer'. However, when raising funding, a real consultant will offer to REFUND THAT RETAINER out of the % BROKERAGE he charges, payable once he finds your Funding Source, and payable from initial disbursements. Retainers only cover part of the costs that a consultant has to pay while working on behalf of the Client. Their real wages come from the agreed upon Brokerage, received when they are successful on the Client's behalf.


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