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How To Finance A Franchise In Canada – Make Franchise Financing Work!

Guest post by: Stan Prokop

Article Overview: Information on how to finance a franchise in Canada . Franchise financing tips and solutions to successfully acquire a business franchise opportunity . Franchise Financing Tips and Solutions

How To Finance A Franchise In Canada – Make Franchise Financing Work!

Is there a perfect, foolproof method on how to finance a franchise in Canada? Naturally there are no sure things in business, but financing a franchise has a 99% chance of success, if, and it’s a big if, you are prepared and have expert knowledge on how this type of business financing is done in Canada.

It’s not secret that franchise finance is hot! From the downsizing of companies in Canada and the U.S. to simple entrepreneur dreams thousands of would be ' business owners' are looking to explore the franchise dream for personal and business success.

Franchise financing pays off, as we said, if you are well prepared. You also have to be in a position to understand that the concept of OPM, or ' others peoples money ' doesn't work in any business, let alone a start up franchise. By that we simply mean that you have to have somewhat of an investment to make in the business. Those funds must be accessible and you have to be in a position to demonstrate the source of those funds.

Typically our clients make their equity deposits into a franchise business from savings, or friends and family type donations. In many cases they have either liquidated assets, i.e. savings, or perhaps collateralized their home via personal line of credit, etc. The bottom line is simply that you should generally be in a position to put 30-40% down as your own investment in the business.

You are now in a position of being able to find the remaining funds you need to both purchase, and of course run the business on an ongoing basis.

We will now show you have to finance that franchise. First of all, ensure you have a proper cost breakdown. That should be broken down into soft costs and hard costs. Soft costs are typically items such as the franchise fee, etc. The real hard costs are the assets and leaseholds and equipment you are purchasing, which should be broken into those three categories.

As much as clients hate to do it, you need a business plan that describes you, your experience, the business, its potential. When you address the key issue of how to finance a franchise you must demonstrate in the financial section how your loan or newly acquired debt will be repaid. If you don’t have experience in preparing such a plan an expert can prepare one fairly economically - we view it as a true investment in financing franchise businesses.

So who exactly is in the franchise financing business in Canada from a lender perspective? One guy is BILL. That's an attempt at humor, as the BIL program, formally known as the Business Improvement Loan program is by far the largest funder of franchise in Canada. That program, coupled with some specialty lending in the areas of equipment and working capital allow you an excellent chance to get your franchise financed.

In summary, when addressing how to finance a franchise in Canada know your costs, summarize your proposal in terms of yourself, the business, and its financial potential, and ensure you are in a position to present the transaction in a professional manner to an experienced franchise financing lender. Speak to a credible, experienced and trusted Canadian business financing advisor if you need assistance in your entrepreneurship financing goals in franchising.

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Article Tags: business franchise opportunity, canada franchise, financing franchise, how to finance a franchise



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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]
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.
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!


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