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Franchise Funding Options


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Ok, so you’ve done your homework and found a franchise that you think is a good fit for you – the key to your future happiness and success. You have taken into account both the good and bad market conditions, considered economic predictions for the coming year, found a great location, talked with franchise owners and you can’t wait to sign the contract and get started.

The only thing standing between you and your future dream is — funding that dream. How are you going to get the money needed to start the business?

Franchise Funding

There are several possibilities for getting the start-up money you’ll need. Here are some of the funding sources:

• Friends or Relatives — If you have a large network of friends and family members who have money burning a hole in their pocket, talk to them about getting franchise funding. Offer a percentage return that simply can’t be found in today’s market. Don’t overextend yourself by promising quick pay backs. Everyone needs to understand that it can take a fair amount of time before you begin seeing healthly profits.

• Private Individuals — Angel investors or private individuals seeking business opportunities in which to invest. One drawback is that they may want to own part of the business in exchange for their franchise funding. That’s ok, as long as you maintain at least 51% ownership of the business. If you don’t want to give up any ownership, this is not a good option.

• The Government — The government is very keen on helping entrepreneurs wanting to buy Canadian franchises. Because new business expands the economic health of the nation, government loans and grants are available. Many have good terms and have reasonable qualification requirements.

• Banks, Lending Institutions — Some banks are reluctant to lend novices going into a business for the first time. Other lenders see successful franchises as more solid investment.

Taking out an equity loan on your home, financing from your own retirement account or cashing in an insurance policy are other options. Using your own financing is, if possible, always your best option. However, make sure that you have more money than you think you might need. A rainy-day fund might be the difference between success and failure.

Dion Earnshaw is a Candaian Author. He provides help introduce prospective franchisees to franchisors, helping both to achieve higher levels of success. He has applied his knowledge and understanding to a wide variety of franchise funding.

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  • Posted On August 1, 2012
  • Published articles 5

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