Financing the Franchise

You have already decided that for you, franchising is the way to go. You have thought-out everything, just one aspect remains in question, finance. Procuring finance for your business is a very important activity. Without proper finances, a franchise can’t survive in the long run. Hence raising finance is a very important activity when one is considering buying a franchise.

We list down a few tips to help you in procuring finance for your franchise

• Sort out your own finances Since loans require big down-payments and high interest rates, it is advisable for one to try and finance much of his business through his own money. For this it is very important to carry out a personal financial audit. List down your assets and liabilities and determine how much money you can put in the franchise. Also this will prove to be of great help, in case you approach financial institutions.

• Apply for a loan When it becomes clear that you won’t be able to finance the entire business on your own, then apply to a financial institution for a loan. You should apply to such institutions with a thorough business plan. Usually financial institutions will be more willing to finance franchisees than to finance a complete start-up.

• Approach your personal banker Also in such cases it is good to approach your personal banker because he can provide you good references of commercial bankers. You can also take his help in determining your approach towards raising finance.

• Ask the franchisor Nowadays most of the franchisors have started providing loans to their franchisees. Although they would not cover the entire cost, they do cover some major costs like purchasing real-estate, purchasing office machinery etc. The finance policy varies from franchisor to franchisor.

• Approach people Start approaching people with your business plan. Give them some stake in your business in return for the money, which they invest in your business. The list would include corporates, investors, friends and your extended family.