Financing For Franchises
Wondering how to finance a franchise purchase? Finding financing for franchises is difficult. Many lenders are hesitant to finance franchises, especially newer franchises with no tangible assets or proven ability to generate positive cash flow. If you're buying a franchise, this article on franchise financing explain your financing options for buying a franchise.
After reviewing all of your options, you've decided the best way to launch your new small business is to open a franchise.
But the decision to open a franchise is one thing. Financing it is something else entirely.
Unfortunately many potential franchisees make plans to open a franchise without giving any consideration to financing, even though financing is one of the major hurdles they need to cross before they sign on the dotted line and open their doors for business.
In fact, financing is one of the first things you should consider when determining whether or not to start a franchised business. Here are some tips on franchise financing that will guide your expectations and help prevent you from a major disappointment down the road.
The first question you need to ask yourself is whether or not you are financially prepared to purchase and own a franchise. What do your personal finances look like? Are you current on your bills? Or are you barely making enough to get by? Do you own more than you owe? All of these are valid questions that you need to ask yourself. Even if you don't ask them, rest assured that lenders will.
If finances are tight, chances are this is not the right time to buy a franchise. A better choice is to concentrate on paying off debt and establishing a positive cash flow. You should also have some savings set aside for the day you finally do buy a franchise because no reputable lender is going to loan you 100% of the funds needed to start a franchise. You're going to need to come up with some of that on your own.
Once you've looked at your financial situation and determined that now is a good time to buy a franchise, your next step is to begin to gather the financial information you'll need to obtain financing. Tax returns, account balances, debt payments and loan amounts are all fair game and you'll need to have them together in a comprehensible form when you apply for financing.
Even if you keep detailed financial records on your computer or through another system, lenders are still going to want to see documentation including tax returns and account verifications.
One of the advantages of buying a franchise is that nearly all franchisors offer some form of financing. What and how much they are willing to finance varies from one franchisor to another. However, if you intend to pursue franchisor financing, be aware of two things:
- The process for obtaining financing through a franchisor is going to be very similar to the process you would go through with any other lender. If you're looking for easy financing, you're probably not going to find it through your franchisor.
- The franchisor will most likely only loan you a portion of the funds you need to get started. This amount can range anywhere from 10% to 75% - hardly ever will a franchisor fully finance you for 100% of the needed investment.
Other Financing Options
Even if you can't get all the funding you need through the franchisor, you still have other options at your disposal. Many banks are willing to finance franchised small businesses, especially if you are willing to pursue a loan guarantee through the Small Business Administration (SBA).
Another form of financing can be found through investors - friends, family members, and acquaintances who believe in you and your ability to make a franchise work.
Want to Learn about Franchise Opportunities?
Browse tons of franchise opportunities in the Gaebler Ventures franchise directory:
Gaebler Ventures Franchise Directory Categories - Alphabetical Listings
- # - How to Find a Good Franchising Opportunity
- A - Franchises for Sale
- B - Directory of Franchises
- C - How to Find Franchise Business Opportunities
- D - Franchising Information
- E - Finding a Franchise
- F - Franchise Directory
- G - How to Buy a Franchise
- H - Owning a Franchise
- I - How to Own a Franchise
- J - How to Choose a Franchise
- K - What's the Best Franchise for You?
- L - Franchise Businesses
- M - Learn About Franchises
- N - Franchise Companies
- O - Want to Start a Franchise Business?
- P - Franchise Info at Your Fingertips
- Q - How Do I Buy a Franchise?
- R - How Much Do Franchises Cost?
- S - Start a New Franchise Business
- T - Franchising Process
- U - Franchise Lists
- V - Franchising Lists
- W - Franchise for Sale
- X - Purchasing a Franchise
- Y - Need to Find Franchising Info?
- Z - Learn about Franchising
Gaebler Ventures Franchise Directory Categories - By Franchise Type
- Accounting Franchises
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- Car Wash Franchises
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- Cartridge Recycling Franchises
- Cell Phone Franchises
- Child Care Franchises
- Child Education and Tutoring Franchises
- Child Entertainment Franchises
- Child Photos and Portraits Franchises
- Child Safety Franchises
- Children Arts Programs Franchises
- Children's Fitness Franchises
- Children's Franchises
- Cleaning and Maintenance Franchises
- Closet Design and Construction Franchises
- Coffee Shop Franchises
- Construction Franchises
- Consulting Franchises
- Convenience Store Franchises
- Dating Service Franchises
- Deli Restaurant Franchises
- Dollar Store Franchises
- Donut Shop Franchises
- Dry Cleaning & Laundry Franchises
- eBay Franchises
- Embroidery Franchises
- Employment and Staffing Franchises
- Environmental Testing Franchises
- Family Restaurant Franchises
- Fast Food Franchises
- Financial Services Franchises
- Fitness Franchises
- Flooring Franchises
- Florist Franchises
- Food and Drink Franchises
- Framing Store Franchises
- Franchises that Serve Liquor
- Frozen Yogurt Franchises
- Gift Items Franchises
- Golf Franchises
- Hair Styling Franchises
- Handyman Services Franchises
- Hardware Store Franchises
- Health and Beauty Franchises
- Health and Diet Franchises
- Health Franchises
- Healthcare Franchises
- Healthcare Services Franchises
- Healthy Alternative Foods Franchises
- Home Décor Franchises
- Home Furnishings Franchises
- Home Inspection Franchises
- Home Repair Franchises
- Home Services Franchises
- Hotel and Motel Franchises
- Ice Cream Franchises
- Insurance Franchises
- Interior Environment Franchises
- IT Franchises
- IT Training Franchises
- Juice Bar Franchises / Smoothie Franchises
- Kid Friendly Franchises
- Kitchen Design Franchises
- Landscaping Franchises
- Leisure and Entertainment Franchises
- Mail and Shipping Services Franchises
- Marketing, Sales and Advertising Franchises
- Meal Preparation Franchises
- Mexican Restaurant Franchises
- Miscellaneous Franchises
- Modeling Franchises
- Moving Franchises
- Party Supply Franchises
- Payday Loan Franchises
- Payroll Service Franchises
- Personal Services Franchises
- Pest Control Franchises
- Pet Franchises
- Pizza Franchises
- Print and Sign Franchises
- Real Estate Franchises
- Rental Franchises
- Restaurant Franchises
- Restaurant Services Franchises
- Retail Franchises
- Seafood Restaurant Franchises
- Security Franchises
- Senior Care Franchises
- Soccer Franchises
- Specialty Foods Franchises
- Sports Franchises
- Sports Restaurant Franchises
- Tanning Franchises
- Tax Preparation Franchises
- Telecommunications Franchises
- Textile Repair Franchises
- Training and Education Franchises
- Travel and Leisure Franchises
- Vending Franchises
- Video and DVD Rental Franchises
- Video and Photography Franchises
- Wedding Franchises
- Wine Franchises
Our Directory of Franchise Opportunities now includes over 1,400 franchise opportunities. If we're missing a franchise, please let us know.
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