You have made the big decision to escape the cubicle and start a life of self-employment to become your own boss. You’ve looked at all the options and have landed on franchise ownership as your path to entrepreneurship. Now, you only have one big question to answer.
How do I pay for the franchise?
Franchising can be one of the best ways to become a successful business owner. But, like everything else, a franchise comes with a price. There are fees charged by the franchisor, royalties, marketing, equipment, and more. Like any business, it will take money to get started. However, not everyone has that kind of cash lying around.
Luckily, there are several methods available for financing your new business. The best way to discover all of them is to sit down with a franchise consultant and let them walk you through the options. But we will lay out a few of them here.
An SBA Loan can be one of the most desirable financing options out there. The loans are backed partially by the Small Business Administration. Because of that, the risk to a lender is smaller, and loan rates and terms can be more attractive than a standard loan.
Because of the nature of these loans, the process can be a little more stringent and can take more time and effort. It is a good idea to make sure this is the best route for financing your franchise before beginning the process. Again, this is an area where a franchise consultant can be of assistance.
Traditional Commercial Loan
Going directly can be an option for you. You will see more standard terms and rates, and the process can be slightly more streamlined.
With a Commercial Loan, the banker will want to look at your business plan and personal credit history to evaluate your credit worthiness. In other words, the stronger your credit score and financial history, the higher your odds of approval to buy a franchise.
Some, but not many, Franchisors offer financial assistance for franchisees. They use affiliate partners and lenders that can help you finance your business.
This option can be attractive because it offers a “one-stop shop” as you move forward with purchasing your franchise. However, you can always take a look at our funding calculator to see our funding programs and the amounts for which you may qualify.
Friends and Family
Okay, we know this does not sound official, but it has worked for thousands of entrepreneurs. Many times, friends or family members will believe in you enough to back it up with money. But make sure if you go this route, everything is written up officially using legal documents. It should go without saying, but there could be a price to pay whenever money and friends or family are involved.
These are only a few of the financing options out there for your franchise. You can get very creative when it comes to investing in the business, and a franchise consultant can help you look at all of those options (and it won’t cost you a cent for the consultation!).
Franchise Matchmakers is a team of franchising professionals that are dedicated to helping people explore business ownership as a career path. Contact them at firstname.lastname@example.org to find out more about franchising options in Denver, Colorado or throughout the US and Canada that are perfect for you.