Financing A Franchise? 5 Important Questions To Ask Beforehand
Starting up a franchise can be stressful in itself, let alone having to worry about where you are getting all the startup capital. There are a ton of financing options available that help with business costs, but the primary stop should be through the franchisor.
Do they offer financing? How much? Under what conditions? All valid questions when it comes to receiving support from your franchisor. Here are some questions to take into consideration when receiving financing from the franchisor:
1. Does The Franchisor Offer Financing? What Kind? What Terms?
Before going out and researching products and lenders, check to make sure if the franchisor offers financing or has a preferred product or lender with whom they do their financing with. If the franchisor offers financing, be sure to compare their terms and rates with lenders offering the same product, to make sure you are getting the most bang for your buck.
2. If Not, Does The Franchisor Assist In Helping With Financing Requests?
Does the franchisor help you put together your loan package? Depending on the loan type you are looking for, the franchisor can lend guidance as to what should be included in your loan package, as well as any product specific lenders they prefer to work with and what those lenders primarily look for in a loan prospect.
3. Does The Franchisor Have An Advantage With Lenders?
Generally Franchisors have specific lenders they do all their business with depending on the product type. This can provide an advantage for the franchisee because if the lender and franchisor have a good relationship, you may obtain better terms on your loan and receive the working capital quicker than usual.
4. Does The Franchisor Supply Helpful Resources For Loan Requests?
Any question your franchisor is unable to answer or provide for you, they should do their best to find the answer or direct you to a third party representative who can, usually a lender. It is important that your franchisor is attentive to any questions or concerns you may have, not only during startup but also during the course of business. This will set somewhat of a precedence for any future interactions and business related issues brought up between you and the franchisor and how resourceful they are for you.
5. Does The Franchisor Continue To Provide Any Other Needed Financial Support Throughout The Business Cycle?
After startup, does the franchisor continue to provide any financial needs when it comes to updating equipment or expanding? Selecting a franchise that offers financial support throughout the life cycle of the business is important because it shows that the franchise cares about it’s owners and employees enough to give them the working capital they need to improve the business or keep it from failing.
For more information about how Gold Beacon Capital Corp can help you with financing a franchise visit our Franchise Financing Product page