YOU’RE LOOKING FOR A FRANCHISE LOAN!
FRANCHISE FINANCING SOLUTIONS IN CANADA
You've arrived at the right address! Welcome to 7 Park Avenue Financial
Financing & Cash flow are the biggest issues facing business today
ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?
CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs
EMAIL - sprokop@7parkavenuefinancial.com
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8
Franchising finance makes many would-be ' entrepreneurs ' feel like they must be ' ALL IN ' when it comes to small business and Canada's franchise loans. ‘ALL IN, 'of course, connotation major personal investments in their franchises. Does it have to be that way? Not necessarily! So let's dig in.
WHAT AMOUNT OF PERSONAL INVESTMENT DO YOU NEED IN THE FRANCHISE?
When it comes to financing a franchise in the current ' hot ' Canadian franchise market, the clients we talk to seem to think that comes with significant personal investments, overdrafts on personal lines of credit, and complicated financing packages that intermingle with their personal finances. Again, that’s what they think, but it’s not necessarily the case.
YOU CANNOT BUY A FRANCHISE WITH NO OWNER EQUITY OR DOWN PAYMENT
We must emphatically say that the would-be franchisee would-be entrepreneur must, in fact, contribute some capital to the business. It goes without saying there no ' free ride ' on ' OPM ' - i.e. 100% other people’s money.
FEES THAT ARE NOT FINANCEABLE FOR A NEW FRANCHISE
In fact, some of the amounts required to finance this type of business adequately, in fact, are normally not financeable - those include the actual franchise fees themselves, brokerage or consultant fees, etc. These types of charges typically come out of the owner’s capital investment as part of the franchise agreement with your franchisor.
WHAT AMOUNT OF DOWN PAYMENT DO YOU NEED TO BUY A FRANCHISE
As a broad rule, you should be prepared, depending on the overall situation, to put down anywhere from 10-50% of the total amount of financing required in business loans to kick start your venture in the franchise business. Down payments, in general, will vary greatly based on the amount of funding you need.
WHAT ARE THE KEY FACTORS IN FRANCHISE LOAN SUCCESS
Funding the balance of franchise loans in Canada is typically dependant on the size of the purchase, the quality of cash flow forecasts, and the lender's interpretation of your franchisor's viability as a whole. Not all franchisees might be aware that many franchisors are willing to let a franchise fail, knowing they can re-sell it to another viable franchisee. Here issues such as ' location/ location/location' and mgmt competence and experience are important.
Never forget that at the end of the day, the actual repayment of the franchising loan, which typically is amortized over 5-7 years, will, in fact, come from ongoing cash flows and profits since most franchises tend to be 100% cash businesses that are important.
WHO FINANCE FRANCHISES IN CANADA
In Canada, franchises are financed via a small handful of specialty finance lenders, the Government SBL loan, and a combo of various other financing solutions that might include equipment financing, merchant advances, working capital term loans, etc. Ensure you have a solid business plan and financial projections in place to help assure application approval. 7 Park Avenue Financial business plans meet and exceed the requirements of banks and commercial lenders. The final interest rate on your transaction will take into account a number of factors such as type of financing, overall credit quality, personal credit score, etc.
CONCLUSION
Investing in a franchise is a major decision for an entrepreneur. So our advice? You don't have to be ' all in ' thinking you have to pledge your personal assets in franchising finance. More important is the ability to seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your funding needs.
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Stan Prokop
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