Finding the money for a Franchise

The cost of buying a franchise can be considerable, but there needs to be a child trust fund to enter the franchise of your dreams. Where is the funding coming from? This is the number one franchise buyers demand formula. There are numerous sources of capital, but start with these basic steps first.

1. Talk to the franchisor. Approximately one in three franchisor provide financing directly or through agreements with third-party lenders. You'll find all the funding arrangements set out in section 10 of the UFOC. Even if the franchisor has no money to offer, is still the best source of information on financing options.

2. Look inside. It is a common misconception that you can or need to borrow all the money to open a franchise. Be prepared to come up with at least 25 to 30 per cent of the total start-up costs. To assess the personal resources, start preparing personal financial statements (you will need one to present to donors in each case).

3. Ask family and friends. This is one of the most common ways to finance a new venture. After all, who knows your dreams and capabilities best? Moreover, they want to help you succeed.

4. Call your accountant. Ask your accountant to recommend a banker. A good accountant - one with experience of small businesses - it is usually a great source of contacts.

5. Find a specialist. You should start at the bank where you do your personal banking, but there's a good chance you will not get what you need there. Local banks are often unable to finance projects of franchising. Your chances will be much better with independent lenders like GE Capital Franchise Finance who specialize in franchise loans.

6. Search the SBA Franchise Registry (www.franchiseregistry.com). The SBA small business loan program is a primary source of collateral for loans. The program for the new franchise buyers is much easier to access since the creation of the Franchise Registry, a central database of information about franchisors that have been certified by SBA ....