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Worried About Getting A Loan For A Franchise ? - Here's your 2011 Franchise Financing Guideline!

Guest post by: Stan Prokop

Article Overview: Information on a loan for franchise finance in Canada . Why franchise financing isn’t as hard as you think if you have the right information and assistance .

Worried About Getting A Loan For A Franchise ? - Here's your 2011 Franchise Financing Guideline!

We know you'd rather start the New Year off with a positive attitude about your new role as entrepreneur - let's demonstrate how you get a loan for a franchise and how franchise financing works in Canada.

Buying a franchise is clearly one of the bigger decisions you'll make in your personal and business life, and you want to be able to do that with specialized information and assistance to help you succeed.

We would never say there are a large number of ways to finance a franchise in Canada , but there are some tried, tested, proven and recommended methods and strategies and we'll show you how they work!

You never want to feel you have been pushed or misguided when you are thinking of getting a franchise financing loan. That's where professional info is always the best solution.

We're the first to agree that the attractiveness of buying a franchise is a powerful concept - you're literally buying a proven formula and it's no secret that you have a better chance of surviving if you purchase a franchise as opposed to starting your own independent business that has no track record.

So when you decide to finance that franchise the ' legwork'... if we can call it that, is important. Your goals are threefold actually, you want to be able to successfully purchase the franchise, ensure you have some capital to operate it, and finally, growth is important to your overall success, so you want access to growth capital for your business if you need it.

The majority of franchises are cash flow based, i.e. the restaurant industry, so operating capital and growth capital are not as important in those scenarios. But if you are purchasing a business that has receivables, inventory, and equipment needs, well... be aware that those items need working capital financing.

Franchise financing has three parties to it, yourself as the borrower, the franchisor itself, and of course the finance firm or bank. Generally most franchisors in Canada will determine if you are a qualified candidate for them - that includes a combo of business and or industry experience, as well as some sort of qualified financial credit check on yourself that determines you have the wherewithal to successfully purchase a business.

You only need two things to finance a franchise and get a loan for a franchise. Simple, right. Well those two things tend to be the 2 items that our clients worry about - they are Debt, and Equity. Equity is of course the amount of funds that you personally will put into the business - debt is what you'll borrow of course.

In Canada the current environment calls for a 30-50% range owner equity infusion... this number in our opinion seems to have crept up over the years. The debt or loan for franchise acquisition comes from predominantly the government. The government!! clients ask? Yes, because the majority of franchises financing in Canada are done under a special loan program called the BIL/CSBF loan program. To qualify you need a business plan, and miscellaneous info required to support your application.

This loan eliminates a huge part of the risk in getting a franchise, because your personal guarantee is limited, thanks to our friends in Ottawa who sponsor the program. Also, and we think this is great; the loan finances things like leasehold improvements, which typically would be impossible to get elsewhere.

Speak to a trusted, credible, and experienced Canadian business financing advisor who will assist you to complete franchise financing successfully. Getting a loan for franchise finance is not as hard as you think, if you have an expert on your side in 2011.

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Article Tags: franchise financing, loan for franchise



Related Forum Posts
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.
Re: Info for would be franchisers... - [quote="Sebastien":2gam0klq][quote="BuzzAroundBooks":2gam0klq]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.[/quote:2gam0klq][/quote:2gam0klq] That is really what I look for in any industry publication. We lead busy lives and when people fill their magazines with fluff, not only does it benefit no one, but it makes us truly appreciate those that don't. Thanks!


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