To say that franchise finance is a ' specialty' area of Canadian business financing is an understatement. There is a fundamental misunderstanding of how this type of finance works, the processes around it, and the risks that you can avoid by doing things properly... with some expert advice along the way.
Is there a systematic way, or method that Canadian franchisees can use to get the financing they need? We think there is. Essentially it is really two very simpe concepts, planning, and knowing the process. Simple as that.
Many new Canadian franchisee ' wannabees' view financing as an obstacle. We can forgive those clients sometimes because in the last few years any type of business financing has been a challenge, whether you're General Motors or purchasing a new franchise in the restaurant industry!
Many franchisees (mistakenly so) think the franchisor you are working with is either going to provide you with the financing you need, or in some cases at least steer you in the right direction. They might do a bit of the latter, but let's be honest here; the franchisors job is selling franchises, not financing them. Even various banks and other franchise lenders probably would like to see franchisors being more involved in the franchising finance business, but we simply don't think that is going to happen.
Education. And guess what, we are not talking about educating you, we're talking on your need to be able to educate your franchise lender about why you are the perfect franchise financing in Canada candidate.
And who are the franchise lenders in Canada. That's probably the main thing you wanted to know, isn't it? There are 4 key franchise lenders in Canada. They are the Canadian chartered banks under a special program called the BIL/CSBF program , one or two very specialized franchise finance lenders ( they only do very large transactions ) , and thirdly some independent finance firms that offer equpment financing tailored specifically for the franchise industry .
But didn't we say there were 4 lenders? We did. And we're pretty sure you know that 4th lender already. It's yourself, because your own equity portion or down payment into your business is viewed of course as a debt or a loan.
So whats the clear process in qualifying for franchise financing in Canada. Is there a clear road map you can follow? We categorically think there is. And here it is.
Identify the total franchise funding you need. Determine what amount of owner equity you are prepared to put into the transaction. Anywhere from 10 - 40% is typically required. Determine which of the 3 other methods of financing will allow you to cobble together a total solution to finance your new business.
Next step - prepare a package that includes a business plan, cash flow, info on yourself and the franchisor, with a focus on success and repayment of your debt. Along the way don't forget that you need reasonable personal credit history, and boy does some specific industry experience or general business knowledge help in confirming your future ability to be successful for a franchise finance business loan.
Does your small or medium-size business need a new phone system? Then you're in luck! Our new, updated comparison guide helps you cut through superfluous information and narrow down your list of solution providers. Get the latest data on phone system features, pricing, and performance metrics in an easy-to-use format. more
The holiday season is filled with frenzy and excitement for businesses and consumers alike. Consumers prepare gift lists, compare brands and prices, and begin shopping with a vigor that is not present most other times of the year. For many businesses, the holiday season accounts for a large profit bump at the end of each year, and companies strive to exceed their goals and keep customers happy during this rush late in the year. more
There are a lot of possible reasons you might want to switch to a new phone system. The old one might cost too much or be too troublesome to operate and maintain. It might not be flexible enough. It might not be reliable enough. Or it just might not have the kinds of features and capabilities that you need in today’s competitive business climate. more