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YOU ARE LOOKING FOR FRANCHISE FINANCING AND FRANCHISE

LOANS IN CANADA!

HOW TO FUND A FRANCHISE

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

CONSIDERING THE OPPORTUNITY OF OWNING A FRANCHISE BUSINESS?

Franchise financing in Canada is the final step in the puzzle for entrepreneurs who are hoping to start a successful business by purchasing a new or existing franchise for financial security in Canada via a business loan.

THE DREAM OF FRANCHISE OWNERSHIP - WHAT FRANCHISEES NEED TO KNOW WHEN FINANCING A FRANCHISE PURCHASE

 Many clients we meet with tend to address the financing issues around their purchase much too late in the game, and by doing some careful planning and research they could have significantly increased their chances of financing success.

The beauty of purchasing a franchise, as it relates to financing, is that as a business owner you are able to determine in advance the total amount of financing you will need to complete the purchase and open the doors to your business.

ASSESS YOUR CAPACITY  TO INVEST IN THE BUSINESS AND RUN THE BUSINESS

In Canada, all small business financing for entrepreneurs is a challenge, and that certainly doesn’t eliminate the franchise industry when it comes to commercial financing or traditional lenders and a  commercial bank loan. Franchisor financing from the franchisors typically themselves is not really available - they sell franchises, they don't finance them. Many franchisors do though have various partner programs in place that might assist you depending on your financial situation.

WHAT TO CONSIDER WHEN CHOOSING A FRANCHISE LOAN

But the reality is tar franchising is viewed very positively by a number of organizations who like the fact that your business tends to be a proven business model that has a greater chance of financial success based on the infrastructure and marketing assistance of your franchisor.

UNDERSTAND YOUR START UP COST!

There are 4 components to franchise financing in Canada for new franchise owners, and our experience and advice to entrepreneurs is that they must in effect choose the appropriate mix of financing, as in general no one financing mechanism can suit both the full purchase of the franchise and the ongoing needs of your business.

THE FOUR COMPONENTS OF A SUCCESSFUL FRANCHISE PURCHASE

So what are those four components business owners need to understand around traditional financing options and alternative solutions?

They are as follows:

Owner’s personal investment/down payment/equity - Acceptable  credit score and good personal finances and   personal credit history is key to approval - owners of small businesses should always check their credit report from credit bureaus when considering a franchise agreement and franchise purchase of new or existing franchises

Government BIL loan - In the U.S. these are known as ' sba loans' under the federal government - In Canada, under new legislation, the franchise fee now can be financed also- Government small business loans are a solid financing option when considering the purchase of a franchise and franchise financing options available - repayment terms are flexible and typically spread over a 3-5 year term - Government loans are in a term loan structure  and complementary with conventional lenders for your  financial requirements

Government grants are typically not available for franchise purchases and do not offer financing for aspiring franchisees - SBL loans range up to 350k and in some cases 1 million dollars if real estate is involved, depending on the nature of franchise location. The interest rate on these loans is very favourable although other factors such as the favourable terms make the program popular for thousands of entrepreneurs every year  who access billions under the program

Equipment financing (if needed) - leasing companies provide excellent long term capital for assets required in your business at interest rates that vary with overall credit quality and asset quality

Third-party working capital loan via traditional or alternative lenders - The alternative lenders offers numerous finance options to the Canadian entrepreneur based on the needs and financial history of the business and can sometimes assist in start up costs with various types of business loans. You can typically receive financing in a matter of weeks based on the amount and type of business funding you need.

HOW CAN I FINANCE MY FRANCHISE PURCHASE?

The cornerstone of your financing is always the amount of your personal investment in the business. A couple of key points need to be made here as you consider the question - Is the business profitable and able to access cash to repay a loan -

They are as follows:

• The amount of your personal investment may, in fact, be mandated by your franchisor – they might insist on you having a threshold of net worth and personal liquidity based on their experience as to what makes a franchise unit in their chain successful

• When you put more money in on your own, as opposed to borrowing you limit the general business risk of having too much debt (However..!!  We have met with many franchisees who put too much personal equity in the business are  tapped out personally when additional financial challenges arise )

• Debt and equity is a balancing act – it’s a balancing act for a corporation such as General Motors, as well as for your new franchise – we suggest you work with a trusted, experienced and credible advisor in this area to develop the right mix of debt and equity – i.e. how much you borrow, how much you put in and ensuring you can maximize on less stringent requirements that might be available

Boy Scouts use the motto ‘be prepared, and you should plan on the financing well in advance of your purpose. Many franchisees we meet with are ‘behind the gun' in closing their transaction because they don’t have simple basics such as a complete  business plan, cash flow plan,  list of equipment and leaseholds they need, etc. - allowing lenders to make quicker and better decisions

Planning is a good thing for the franchise owner; In franchise financing, it’s a required thing! 7 Park Avenue Financial is a business plan expert and our detailed business plan will meet and exceed the expectations of  banks, credit unions,  and commercial finance lenders- ensuring potential lenders understand the value of your submission and ensure you have the best option or other options available.

CONCLUSION - SOLUTIONS FOR FRANCHISE OWNERS

Financing a franchise can be expensive, but those who are short on capital should not let the price tag dissuade them if significant investment is required. Investing in a franchise requires looking at available financing options before making a decision you can meet the repayment term under any financing arrangement.

Consider your franchise investment carefully, work with a trusted advisor, understand how franchises are financed, and finally, develop the right mix of financing that allows you to complete the acquisition and grow your new business for future sales and profits.

Franchising can be expensive but there are business loans and alternative financing options that can help you get the funding you need

Talk to  7 Park Avenue Financial about what financial assistance is available to the Canadian entrepreneur - we're a trusted and experienced financial advisory services and originator of Canadian Business Financing for loan options and the loan amount you need - making your application process easy and focused on approval for new franchises or purchases of an existing location.

FAQ: FREQUENTLY ASKED QUESTIONS / MORE INFORMATION

Can you get financing for a franchise?

There are different options for financing a franchise, depending on the individual's credit rating and the size and type of loan required. Traditional loans,. government loans and alternative lending finance the franchise arena in Canada

 How much will banks lend for a franchise? 

A bank will most likely lend no more than 50-70% of the start up costs. It is important to consider how much you are willing to put into the company while also thinking about the maximum amount of money that banks will lend. 

Click here for the business finance track record of 7 Park Avenue Financial