YOU’RE LOOKING FOR FRANCHISING FINANCE ASSISTANCE!
FRANCHISE FINANCING OPTIONS IN CANADA
You've arrived at the right address! Welcome to 7 Park Avenue Financial
Financing & Cash flow are the biggest issues facing business today
ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?
CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs
EMAIL - sprokop@7parkavenuefinancial.com
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8
Business franchise loan challenges. When it comes to financing a franchise in Canada there are some critical ' before and after ' issues that need to be addressed. When they aren’t addressed properly the situation becomes... shall we say ' gut-wrenching' around those franchising opportunities you have researched! We'll examine some of those key points in owning a franchsie. Let's dig in!
HOW MUCH CAN YOU PERSONALLY INVEST IN YOUR FRANCHISE BUSINESS
Your initial decision to purchase a franchise should always be tempered with the amount of funds that you can personally invest in the business, i.e. the down payment. These day's those funds come from savings, equity lines of credit, and in some cases corporate severances. Typically the franchise fee itself, ie your right to own the franchise is not financeable and is covered off by the purchaser.
Knowing the amount that you can comfortably commit to the business will play a key role in both the size of the franchise you buy, as well as the financing you can arrange in this somewhat specialized field. Frankly, in Canada franchise funding comes from the smallest handful of resources - a specialized franchise finance firm, a bank loan, and some ancillary financing services such as equipment finance, leasehold finance, and merchant advances when it comes to working capital needs.
WHAT DOES THE GOVERNMENT OF CANADA SMALL BUSINESS FINANCING PROGRAM FINANCE?
We reference banks, but by far the amount of financing that the Canadian banks deliver is through a vehicle known as the BIL/CSBF loan program. It's the government program that over time has become the de facto vehicle to finance many of the franchises in Canada. Challenges arise when you are purchasing a service franchise as the BIL program is tailored more specifically to:
Assets
Leasehold improvements
Real estate
Can the size and quality of the franchisor you are working with affect your business franchise financing success? To a certain degree the jury is always out on that one - suffice to say that some franchises are viewed as a bit more risk or somewhat more or less successful than others. Different types of loans will vary greatly with respect to interest rates, terms, flexibility, repayment terms,etc.
YOUR FRANCHISOR DOES NOT HAVE TO BE A CANADIAN FIRM
Also, as a point, when a franchising loan is under consideration in Canada it in fact does not make a real difference if your franchisor is Canadian, U.S. based, or in some cases, you might simply be working with a Master Franchisee who has purchased the rights to your overall territory and is able to offer a franchise agreement to yourself. Ensuring you will have good marketing support is key to long term success. It will help if your franchisor belongs to the Canadian Franchise Association.
BUSINESS PLANS AND A COMPLETE APPLICATION SUBMISSION IS KEY TO FRANCHISING SUCCESS
Your business plan and cash flow document are critical to financial success. In fact, while the business plan is needed before you start your franchising process it can become a key valuable document in benchmarking your success down the road as compared to your original aspirations /projections. 7 Park Avenue Financial prepares complete business plans for prospective franchise owners that meet and exceed the requirements of banks and all commercial lenders. A good business plan submission will help you get the best interest rate in the type of financing you need.
Your franchise purchase should also consider what you need to do to finance the balance sheet for ongoing day to day funding needs. It's not always about just start up costs! Franchise fees will usually entail royalty payments based on a formula of your sales levels.
CREDIT SCORE AND PERSONAL CREDIT HISTORY COUNT!
Personal finances are a key part of the overall franchise finance process. You will need good reasonable credit history for your borrowing, and you will want to ensure that in your financial due diligence you assess the fact that your business will generate cash flow and profits that will allow you to draw a decent income based upon your needs. Business experience and a reasonable personal net worth are key elements of quicker approval.
ENSURING YOUR CASH FLOW PROJECTIONS ANTICIPATE PROFITS AND LOAN REPAYMENT
When it comes to the franchising loan you want to ensure that your finance package addresses both the needs of the lender (i.e. repayment of your loan) as well as your ongoing working capital needs. Financial projections we see from clients are often not realistic, which can create some serious ' start-up ' problems when it comes to financing ongoing operations.
CONCLUSION
At the end of the day, the whole business franchise loan process requires both a ' before and after ' approach. Careful planning and utilizing guidance from your franchisor's experience will get you to the goal line with respect to the financing options and financing solutions available.
Franchises are a key part of the small business economy in Canada. Don't let funding franchise loans be a major obstacle to success. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with franchising finance needs in the Canadian marketplace.
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Stan Prokop
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