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How to Finance Your Franchise

Written by: Tom Parsley

Article Overview: Owning a business is the American Dream, and owning a franchise is often times the safest way to make that dream come true. But sometimes the nightmare is figuring out how to finance the purchase of a franchise. But there are many ways to buy a franchise, even if you don't have a lot of cash.

How to Finance Your Franchise

Over the past several years, many people across the country have envisioned leaving their current work environment for the opportunity to own a business or franchise. In many ways that is the easiest decision to make but the work is just beginning.

In the past several years the opportunity to own a business and franchise has appeared around every corner and in nearly every industry. For many families the challenge is not decide whether to get into business but how they will finance the one that they want.

There are a number of financing options that exist and they all have pros and cons which need to be researched.

SBA Loans – Small Business Administration guarantees loans for banks and lenders and typically will have limitation on values. Total loan amounts under $100-150,000 may offer low or minimal documentation and a more efficient process.

401k/Retirement – These are specialty financing options. There are several organizations that focus on these programs to avoid penalties and taxes while accessing the values you have in your retirement plans.

Franchisors may also have financing options available. As the established company, with a history, many times they have relationships to support financing options.

Finally, personal assets – with the numerous programs available throughout the three categories mentioned above, it is necessary for you to plan on raising 20-30% of the capital yourself. All of the lending institutions want to be able to know that they are partnering with you, as much as you are partnering with them.

The process of securing financing can be long and tedious. Be patient, diligent, and do not lose focus on your defined goal of opening and operating your own business for you and your family.

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Article Tags: financing options, financing options, financing options, financing options, franchise, SBA Loans Small Business Administration, the opportunity, the opportunity



Related Forum Posts
Re: Finance is the primary requirement of business - [quote="rauljoseph":36x8dadn]Finance is very important in a business. It is all about managing the business' money and other assets. Finance includes the study and analysis of processes, financial institutions, markets and instruments that are involved in the transfer of money or anything that has a monetary value among consumers, businesses and government.[/quote:36x8dadn] Good point. I'll just add that if I was going into business for myself and could only have one skill it would be Sales & Marketing. You need to be able to create customers first and foremost. Finance is more of a support function for entrepreneurs.
Finance is the primary requirement of business - Finance is very important in a business. It is all about managing the business' money and other assets. Finance includes the study and analysis of processes, financial institutions, markets and instruments that are involved in the transfer of money or anything that has a monetary value among consumers, businesses and government.
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]


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