(Best franchise) Important Lessons On Financing A Franchise In Canada – Franchise Business Loan Success

24. October 2012 · Write a comment · Categories: Franchise Consultants, Top Franchises

By sprokop

 It might be a proven business model, but funding that model can be a challenge without the right information and assistance. We’re talking about financing a franchise. A franchising business loan done properly is of course what is going to make those franchise opportunities you’ve chose work.

So is there a cost to buying into what most people recognize as a ‘ proven system ‘. The essential cost of course is your own personal investment into the business, as the type of financing that you obtain to acquire, and grow your business.

While many clients come to us with the mindset that financing a franchise is a ‘ start up ‘ type of business that comes with all sorts of risk and challenges the reality is that in many ways financial institutions and other lenders view this business model a safe way to enter into entrepreneurialism. And that translates, when you know what you are doing, into financing opportunities to create success for your vision.

A typical question we get is whether the type of business or brand or reputation of franchise opportunities in Canada matters relative to the finance challenge around acquiring that business. In general we can say it does not. Of course if you have been lucking enough to acquire the rights or an existing unit with an international brand that is already established that’s one step ahead, but the reality is that each new franchise financing opportunity is typically handled on its own merits.

In Canada you can typically be expected to put in a minimum of 10% permanent equity into your business when utilizing one of the most popular finance programs available to franchisees. However to make that transaction work, and get approved realistically you should be prepared to demonstrate the ability, not necessarily the cash, to fund up to 30 -40% of the acquisition.

Don’t forget also that an existing franchise, wherein you are purchasing for a franchisee who is selling is generally financed under the same mechanisms as a new unit. In Canada it always feels like the majority of franchises are Quick Service type restaurants but given that the franchise industry in Canada represents almost 50% of the economy you can be assure there are lots of other industry business models out there offered by Canadian, U.S. and international franchisors.

If there is one ‘ trick ‘ ( can we actually call it a trick?!) to financing a franchise in Canada it probably boils down to being prepared in advance for financing while at the same time working with a franchise financing institution or advisor who has special expertise in this type of finance.

In Canada many of the well known brands in franchising do in fact have relationships and packages available to you with 2 institutions, our chartered banks and one international franchise finance firm. However, we want to make it clear there is certainly no guarantee on financing your new business just because a relationship may have been forged in the past.

A franchising business loan in Canada is most easily accomplished via the federal BIL/CSBF program. This can be complimented by equipment and asset financing as well as working capital solutions that are either entwined or independent of the main financing.

Speak to a trusted, credible and experienced Canadian business financing advisor on franchise opportunities that can be properly financing in Canada.

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(Franchise magazine) Set Financial Goals to Build your Franchise

24. October 2012 · Write a comment · Categories: Franchise Consultants, Franchise Directory, Online Franchise, Top Franchises

By Daniel Cargille

 Whether you’re opening your own business or you’re buying into a franchise, it’s important to know what your overall goals are. By building out goals you can understand some of the most important aspects of a business such as what your exit strategy ultimately is. Why are you seeking to buy into a franchise? Do you want money? Fame? Freedom? Guaranteed Retirement? If someone were to ask you why you wanted to start a franchise, what would you say?

Developing Goals

Overall your goals are a necessary beast to help you decide where you need to be at any given time, what to expect from your business and ultimately where your business should be in the future. For the sake of simplicity, most goals can be grouped into 3 categories.

Economic goals – Economic goals align with those who are trying to improve their financial position either now or in the future. A better weekly check now along with a secure retirement are two economic goals. For a franchise owner this can be a great motivator for getting a business off the ground.

Personal Goals – Personal goals can carry a person a long way and sometimes all it takes for success is for you to push yourself. A personal challenge or goal can get you running along a trail of milestones to reach a long-term goal. A personal goal may not be quantifiable like an economic goal but they’re just as important when it comes to getting a franchise off the ground. The opportunity to finally do it for themselves drives many entrepreneurs to set simple personal goals to keep them on track.

Retirement Goals – While this can be classified under economic goals, retirement goals can stand on their own two feet. With the way the current economy stands it’s hard to set yourself up for retirement through investment accounts alone. We all want to be able to have a great retirement wrought with fun and relaxation. These goals ensure that you have a strong exit strategy in mind to call it quits someday.

While any of the categories can help you generate long-term goals to help your business run better it’s the hyper-focused short-term goals that will really drive you through the day to day stuff that can trip up other business owners. Setting realistic short-term goals will let you measure your success accurately.

Short term goals can be extremely simple – such as getting the necessary permits to open, setting up reliable vendor accounts, establishing a line of credit for your business, hitting a profit milestone once you first open, etc. The main benefit to achieving short-term goals is the psychological benefit. Every victory, whether from hitting a short or long-term goal, will ultimately fuel your desire to do better and continue your winning streak.

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(Franchising a business) Franchise Benefits

24. October 2012 · Write a comment · Categories: Franchise Directory, Franchise Magazine, Online Franchise, Top Franchises

By Amanda Rodriguez

 For entrepreneurial spirits out there that dont want to risk too much and want a head start in profits and marketability, perhaps the best business decision to be made is buying into a franchise of your choosing. Read on to find out the top benefits of the franchising model, and how you can boost your business credentials with a small startup cost yet a stable business and money making paradigm.

Budding entrepreneurs have many options but most consider starting their own business when they first start out. The truth is, building your own business from scratch is a lot of hard work and when you dont know the how to play the business game yet, it will be quite a struggle. This is where a great alternative of buying into a franchise comes in, which has far greater benefits, for first time entrepreneurial spirits.

First off, if you are passionate about a specific business sector, for example, restaurants, a recognized and highly reputable restaurant that is available for franchise should be thoroughly researched. If you like the way a certain company works, and the company culture and philosophy and find it suitable to your interests, why not open your own store or business under its policies and mantras? Youll learn the in and outs of the business while getting a head start on establishing brand awareness. Do not underestimate the power of brand recognition, this is what will get you customers right off the bat, and they wont have to question or try out your new establishment. A great and lucrative revenue stream will practically be handed to you because the start up efforts have already been laid out for you to pick up.

Secondly, when you own a franchise you avoid a lot of risky mistakes. Youll receive comprehensive training in the sector, and youll learn first-hand how to avoid profound mistakes that would otherwise cause your first try at your own business to crash and burn. This alludes to a higher success rate at a significantly lower rate of risk, since the franchise helps out and nurtures your success at whatever the cost. They dont want you to fail because that would hurt their brand and company also. In other words, youre in it to win it.

Starting your own business would normally entail a great amount of start up costs. With franchising, you know exactly what your initial costs are going to be, in the most efficient manner of spending. You c an open your business a lot sooner than if you were to build your business from the ground up.

Another great perk is that business insurance costs are included in the franchising costs, depending on the contract and your agreements with the franchise operating costs. If anything you would be saving money on monthly business insurance rates due to an established brand identity and foreseeable risks have been addressed. Start researching business insurance policies today and also start looking for the franchise that suits your needs and interests the most, as it will be the most lucrative and positive business decision you will ever make.

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(Franchises for sale) How To Kick Start Franchise Financing Success. Funding Your Franchising Loan Needs In Canada

24. October 2012 · Write a comment · Categories: Franchise Consultants, Franchise Directory, Franchise Magazine, Online Franchise, Uncategorized

By sprokop

 Thousands of Canadian would be entrepreneurs in Canada clearly recognize the trend that franchising in Canada is a major industry and a leading contributor to the economy as a whole. You want to be a part of that trend!

So, that being said how does the entrepreneur translate that opportunity into his or her ability to kick start franchise financing funding in a manner that makes getting a franchising loan a success as a part of their overall entrepreneurial strategy?

Let’s share some solid advice on what type of financing you should utilize to successfully complete your new or existing business acquisition. Yes, existing franchises can be purchased and financed also!

The amount of money that you yourself put into the business is a key factor in your potential sales and profit success. But two questions immediately arise: Do those funds necessarily guarantee you success based on how much you put in, and secondly, where do you access the balance of the finances you require?

One somewhat intangible issue that also always comes up is the ability of the entrepreneur/ borrower to demonstrate how much experience they have in a chosen industry or business. So things like your own outlook on being an entrepreneur / business owner (it’s not as easy as you think) and matching your skills to the type of business you buy and finance are critical.
By the way, we think there are very few executives in even the largest most successful corporations in Canada that have the total skills involving sales, marketing, operations and finance as a total skill set . Those people are the real superstars.

Naturally one of the reasons you purchase a franchise is that you are buying into, hopefully, a proven system of a brand, business model, marketing and advertising assistance, etc.

OPM is important when it comes to franchise financing. That of course stands for Other People Money, which represents the balance o the funding you need for your franchise purchase. In Canada, along with your equity, or we’ll call it a down payment the balance of your financing comes from either a commercial finance company that either specializes in franchise finance, or one that can compliment the financing you need. A good example of that is an equipment finance company that can acquire and lease assets for you such as POS systems, other hard assets, vehicles, etc,

In general anywhere from 10 to 40%, sometimes more is required as a down payment or equity contribution to your business. We quickly add that that doesnt always necessarily mean that money is permanently contributed or ‘ tied up ‘, but you just must show that you have access to liquidity to get the busines off to a good start for working capital and growth purposes.

Two key points for the franchisee – a solid majority of the franchising loan scenario in Canada is done via the government BIL/CSBF program. It offers great rates, terms and structures for the acquisition of your business. Where the program falls down a bit is when it comes to a service type business where there are limited or no assets to purchase / finance.

Our other key point – have a crisp ‘ package ‘ in place when it comes to a business plan, industry overview, financial projections, etc. This isn’t the rocket science it sometimes seems when it comes to getting a good proposal in front of your lender.

You can’t afford to miss out on your business purchase just because of a poor presentation package, and it can also be easily accomplished by using an expert such as a Canadian business financing advisor that is experienced and has success and knowledge of franchise finance.

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(Buy a franchise) What’s The Cost And Return on Franchise Financing In Canada.? Franchising Loans & ROI Explained

24. October 2012 · Write a comment · Categories: Franchise Consultants, Franchise Directory, Franchise Magazine, Online Franchise, Top Franchises

By sprokop

 When we talk to clients about their concerns of getting franchise financing in Canada they also want to focus on whether the cost to finance that franchise is in effect a good ‘ return on investment ‘, in relation to both their own personal investment in the business as well as ongoing returns on that equity based on the ongoing profits of the business and the risk involved in this type of business, i.e. franchising!

The amount of capital you need to raise relative to your franchise loan varies in Canada. Factors that are critical here are the amount of capital that in some cases your franchisor might insist you put into the business. Another key factor is of course the amount of funding you are able to raise based upon your own personal financial situation, one factor of which is your personal credit rating. Clearly the majority of franchises in Canada are regarded as ‘ small business’ so it makes sense that the banks and other firms that participate in franchise financing are focusing on you personally as well as your overall business prospects.

Canadian chartered banks, contrary to popular opinion, do participate in franchise financing in Canada. In fact in our opinion you could call them the major lender to the industry. But what many clients don’t understand when looking for franchise financing in Canada is that the bank lending in the franchising industry is done under the auspices of the Government Small Busines Loan, which is perfect suited to the type of financing you probably need.

So how much do franchises cost. We can safely say that they range in price for very nominal amounts such as 10k or so for a small service based franchise to millions of dollars for such large brand names… think ‘ golden arches’ as an example .

Cost factors of your franchise vary with respect to how well your franchisor is doing in Canada, or perhaps it’s often the case of a franchisor in the U.S. who wishes to expand or introduce their presence in Canada.

We mentioned the government small business loan as a prime source of financing for the cost of your franchising proposal. This loan actually maxis out at $ 350,000.00 but in our experience that amount finances a huge amount of the franchise opportunities in Canada. They are great loans because they offer sensible maturities of 5-7 years, solid interest rates and nominal fees attached to the overall financing. The initial franchise fee itself is not financeable under the program, so typically our clients fund that portion themselves, which of course counts as their overall equity,

It’s important to start sourcing your financing for your new franchise early on in the process. The bottom line, it’s never too late to start looking at your financing options available, including our aforementioned SBL loan.

So where does the capital come from relative to your own investment in the business.

Typically we see these funds coming from a clients own personal savings. That might also come from a severance situation based on the clients exit from ‘ corporate life ‘. In some cases you may choose to collapse savings, registered, or otherwise.

We encourage customers to understand the concept of financial leverage when it comes to R O I, or return on investment. Measure risk against reward; ensure you can withdraw a reasonable amount as a salary from the business, based on your financial projections.

And that ROI! Compute and analyze it just as you would any investment, such as a stock. Let’s say something costs 100% and you earn a 6% dividend. That’s generally a reasonable amount. So if you sell that investment 12 months latter your ROI is 6%. Think of that stock as being your business and the dividend being your business profits. Measure risk and reward and factor in the time and commitment you need to make into the business.

Franchising financing in Canada can be as difficult or easy as you make it. Speak to a trusted, credible and experienced Canadian business financing advisor who is expert in financing the cost of your franchising. And here’s to your great, hopefully, Return on Investment!

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