How To Finance A Franchise

1. Article: Abnicholas HOW TO FINANCE A FRANCHISE People who want an independent life through entrepreneurship by following a clearly marked path for success may opt to start a franchise business. In comparison to other businesses, in a franchise format the risks are smaller and support network is stronger. However you must understand that this form of enterprise requires patience, time and hard work to be successful. In franchise business, an agreement contract is signed by both parties, in which the parent company or the franchisor sells the right of business’s name, brand and product to the franchisee, who is going to own an individual branch of that company. Now there are many industries working with franchise structures and they range from well known companies of health care, hospitality, construction and even food services, like McDonald’s, Subway and Supercuts. The important question to answer when planning for this business is how to finance a franchise, as funding remains a hurdle or strong pillar, whatever you think, for potential franchise owners. So, here are some financing sources which help to overcome this problem: The franchise’s Parent Company The Parent company or franchiser is the best option to seek funding. They can help to provide debt financing, especially during the startup process. Ask them for other recommendations and sometimes, they may provide you with a list of lenders, with whom they have agreement to not only grant fast approval for loan, but also to shorten the procedure. Self Financing If you can arrange for or have enough capital to cover initial start-up costs, then it is the best solution. Then you don’t need to seek money from others or apply for a loan, removing the pressure of debt from your business decisions. If your home possess a retained value, and you have a significant portion of equity in it or any retirement funds, then you can use it as a time tested source of finance for the start-up. Bank Loan A trustworthy and reasonable source of finance for a franchise or any small business is of course, a bank. Many banks trust a franchise format of business due to its stability, goodwill, customer awareness and strong track record. So, they easily provide loans after some legal and official procedures. But before applying for the loan, make sure that you have all the important data and papers for information. Small Business Administration’s Loan Program. Any small business or franchise is suitable for SBA program as long as they keep track with its guidelines. It doesn’t provide the loan, but will guarantee a portion of the loan, which helps to reduce the risk for bank lenders and other finance agencies. Financing Companies Since banking procedures take a long time to and a lot of efforts to complete, you can search for alternatives sources finance online, along with asset based funding and more. They may stipulate a higher interest rate than banks, but will also offer speedy delivery of funds, easy terms and conditions and fewer guarantees. There are many companies available online which specialize in franchise financing after a short process with eligible securities. To know more on securities based line of credit, visit Abnicholas.com.

2. Article: Abnicholas ABOUT THE AUTHOR Nick Bentley is an expert in credit functions who also likes to write many interesting articles and blogs, helping people to understand these concepts and take sound finance decisions. He recommends ABNicholas.com if you wish to understand how to finance a franchise.