Franchise Financing: What Are Your Options?

Owning a franchise is the dream of many a business owner, and would-be business owners. The concept of buying into a proven business model, with great branding campaigns being done for you, creates a very lucrative picture. Unfortunately, the success model you want to buy into comes with a hefty price tag. Most people are scared off by the numbers, but there are a number of franchise financing options you can explore before “giving up”.

Here are a few options for franchise financing:

Look at what you have. You might own assets you could do without for the time being, and selling those off would greatly reduce the pressure of repayments on the remainder of your loan.

Family and friends who know you and your capabilities might be willing to trust you when lending institutions won’t.

Talking to an accountant could yield a wealth of information. These people are constantly in contact with many different companies and business people, and their knowledge and value is often underestimated.

Talk to a specialist, by approaching an institution that specializes in franchise financing. Independent lenders, like GE Capital franchise finance, have slightly different ways of evaluating your situation, and could come through when your bank manager backs out.

Talk to the company selling the franchise to you. Many companies, especially those with a high success rate expectation, are willing to help new franchises to start up. If the company is willing to risk money on your venture, you know that you can expect total commitment from their side to ensure your success.

You can also search the SBA Franchise Registry. Their small business lending guarantee program has enabled many a small business owner to realize a dream. The registry is a database of franchisors certified by the SBA.

Lending money is all about risk management. The risk depends on the perception of the person, committee or board making the decision. Different people, and different institutions have different ways and values to evaluate and calculate the risk you pose. Franchise financing is no longer something that starts and ends with the manager at your local bank.