Your Route To Franchising: Securing A Franchise Loan
Money, it’s a gas. For those of us fortunate to have enough of it to do what we want to do in our lives, these famous lyrics bear relevance. However, for the vast majority of us who require a better financial situation to fulfil our achievements – like owning a franchise – heading to the bank for a loan is often the only option. We take a look at what is required to obtain a loan to start a business and the process of applying for one.
Choosing An Opportunity
In most cases, picking the right franchise for you comes down to the limits of your own ambition and the crux of your interests. It is, however, worth thinking about the business you are investing in and whether you are suitably qualified to run it from a lender’s perspective.
In all likelihood, the franchise you choose to invest with will review your application thoroughly, ensuring that you are someone that will extend the brand with a track record of success. It is worth choosing a brand that will suit your ambitions, your personal wealth and will give you the return on investment you are seeking. For example, a recent graduate with £5,000 in the bank is unlikely to get a loan application approved for a £500,000 restaurant franchise.
A good franchisor will help you with your loan application. Many franchisors have excellent relationships with Franchise Managers at banks and they know which candidates will get a loan approved before they even draw up the business plan. Often franchises companies employ the services of businesses, such as Franchise Finance, which is a company dedicated to the drawing up of business plans and ensuring that banks approve loans. These middlemen are experts in their fields and Franchise Finance boasts a 95 per cent approval rating for all applications.
The Business Plan
By far the most important document when applying for a loan from a bank, the business plan must be comprehensive and based on facts. Due to recent changes in the franchise banking sector, it has emerged those investors hoping to become franchisees must demonstrate a personal working knowledge of the concept they are investing in as well as a track record of success in a relatable field. Business plans must cover everything from projected profit and losses to location and much more besides. It is worth remembering that while a bank will provide much of the capital needed to start a business, investors must bring some capital to the table initially.