YOU ARE LOOKING FOR FINANCING FOR CANADIAN FRANCHISE OPPORTUNITIES!
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Financing & Cash flow are the biggest issues facing business today
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Financing franchise opportunities in Canada. That brings to mind one of our favourite old expressions - 'tuition is very high in the school of experience'! That's why when we talk to clients about franchisee loan financing in Canada we're often cautioning against what can go wrong as much as what can go right. Makes good business sense, right?
There is no arguing of course that franchise finance in Canada is still booming, the general malaise in the economy notwithstanding. From our perspective, we are even optimistic about the finance landscape out there when it comes to financing your franchise.
One thing we can say is that your options on financing your Canadian purchase of a new or resale franchise are hardly unlimited. In reality, there are actually down to self-financing, getting some sort of assistance from your franchisor (doubtful in most cases) and either utilizing the government CSBF program or the services of a specialty franchise finance firm. In some cases what we term as complementary financing is available, that might come from an equipment and leasehold financier, or a true working capital loan from a regulated financial institution.
In many cases, either some initial or ongoing financing for franchises is done via personal and corporate credit cards for your new business. This clearly is a double-edged sword, in that while it provides some capital for either assets or working capital needs but comes with the higher rates that we associate with credit card debt.
Additionally, we always recommend that the franchisee make a strong effort to separate his business life from his or her personal life when it comes to finances. Almost everyone agrees that one of the prime drivers for incorporating your business is the reduction of personal liability - as all business is a risk. (Naturally, some are riskier than others as we have seen over the years!) On balance it would certainly be better to acquire a corporate card for your business as opposed to a personal card - just common sense, right?
Many new franchisee 'newbies' don’t often consider the concept of ROI when they enter into their franchise agreement. The reality is that whether it's a franchise or any other business you can't afford not to wrestle down this concept, It's all about carefully analyzing how much you need to put it, what amount of sales and revenue you need to at a minimum break-even, and finally, and certainly as important, what level of profit, including your salary, of course, will be a satisfactory return on your business.
Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in covering off the risk and reward of a franchise loan when you're assessing those Canadian franchise opportunities in Canada.
Stan Prokop 7 Park Avenue Financial/Copyright/2020
