Although there is somewhat of a negative spin on business funding and business financing in general the reality is that as a whole the franchise industry is viewed as a positive 'vertical market' by the lenders that participate in this area. Many new entrepreneurs will be surprised to hear that one government financing vehicle is actually the most utilized by new franchisees.
We also sometimes forget to reference the fact that when it comes to a franchise funding that whole process can also involve your purchase of an existing franchise where the current owner is motivated to sell. Certain processes, procedures and recommendations on buying an existing franchise are somewhat different than your traditional new 'turn key' approach to a brand new franchise.
So let's get back to our 'survival' theme. What elements of preparation are critical to that? Many franchisees we talk to complain or tell horror stories of the time it took them to finance their business. Our observation on that is simply that if you are not fully prepared up front to present a package to the right party, containing all the critical elements... well you know what comes next... there is just simply a tremendous amount of back and forth and potential frustration on your part. And don't forget you also run the risk of alienating your lender and being perceived as ill prepared to own and run an entrepreneurial business.
So what you do need to have in that packaged that allows you to survive the entire financing process?
The key elements are a concise business plan as a good start! We also caution franchisees that the plan should focus on repayment of the loan and franchise funding itself - with less emphasis on all the marketing and 'pr‘ type material that is in many plans we see.
Key elements of that plan are your background and experience. If you are purchasing a business and looking for a franchise business loan in an industry in which you have no experience be aware that that will be come a discussion point with the lender. In reality any business person that has solid overall management experience and skills, coupled with some financial acumen should be in a position to ‘up sell' their skills as a new franchisee and entrepreneur.
We speak of the 'lenders' in franchise finance funding in Canada. If you don't know who they are we can virtually guarantee you frustration and a potential decline of your proposal.
The largest franchise lender in Canada... are you ready for this... is the government of Canada by virtue of their support of a special program called the BIL/CSBF loan program. The majority of franchise business funding is done through this program. By the way it has great rates, terms and structures that are often perfect matched to your needs.
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