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There seems to be a lot of 'DIY' out there today, that being the acronym for 'Do It Yourself' of course. So we were thinking, is it possible that Canadian franchise financing for the purchase of your chose franchising endeavour in Canada is a 'DIY' project?
Let's talk about a lot you can do on your own, (as part of that 'DIY‘) and we'll also focus on some key areas where expert assistance is highly recommended!
Our focus is of course on financing that franchise; we're assuming you have already picked your business of choice. A solid first start is to have a realistic discussion with your franchisor around their knowledge and assistance in the area of helping your franchising project in Canada. It's the policy of some franchisors, certainly not all, by the way, to develop financing guidelines for their units. This might be in conjunction with a preferred program via a financial institution, or, as importantly, their own experience in levels of investment, capital, and working capital to acquire, run, and of course grow the business.
If there is one caveat here we simply say to clients that you should not infer any sort of guarantees that your financing loan or package will be approved simply because a program exists that you might potentially fit into. Our own experience though is that certain financial institutions target many successfully larger franchise chains and will go out of their way in ways we can't mention to get a transaction completed on your behalf. (Think hockey/donuts as an example! Enough said!)
Getting back to DIY though, a business plan, either prepared by yourself or with input from you is critical. This can easily be accomplished with help from the franchisor, your accountant, or an experienced Canadian business financing expert in the area of franchising in Canada. We forgive clients for thinking they are out of their league in prepared a business plan and cash flow, but it's not as hard as you think.
The reality is that if you can help prepare and understand and present a plan your chances of financing approval increase significantly.
DIY also can be taken in the context of looking at your own personal investment in the business. Your choices are of course 100% outright cash purchase (not recommended by us), 100% borrowed funds (not recommended, and oh by the way, impossible!), and the real-world solution, an investment by yourself with some real-world franchise financing for the balance of your purchase.
DIY with respect to your owner equity is anywhere from 10- 50% in Canada. Franchisees should spend part of their DIY time in assessing their personal net worth, their liquidity, and how they will raise and contribute their portion to the franchise investment.
We've shown that a good part of your Canadian franchise financing journey can in fact be a DIY process. Where you win big time is by using, where necessary the services of a good accountant, franchising lawyer, and an experienced credible and expert Canadian business financing advisor to complete your purchase successfully, under terms that make sense for your situation.
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