YOUR COMPANY IS LOOKING FOR FRANCHISEE FINANCING SOLUTIONS!
FRANCHISE FINANCING LOANS IN CANADA - FINANCING A FRANCHISE START-UP
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
Franchise business financing in Canada requires solid basic knowledge around those ' headwinds ' that that buffet the franchisee about when he or she is seeking a franchise solution. Without some expert help, the franchisee potentially can fail in his efforts to finance a business successfully. So, how to buy into a franchise and secure finance? Let's dig in!
WHY IS BUYING A FRANCHISE POPULAR - BUYING FRANCHISES
The Canadian franchise sector as a whole couldn’t be more ' busy ' - in fact, many maintain it's hot. ' A fairly solid economy, as well as the desire to become an entrepreneur of sorts, makes franchising attractive. Corporate downsizing also tends to offer opportunities to experienced individuals who might otherwise view starting a business as too ' risky.' The type of franchise you choose will vary greatly based on your business expertise and capital requirements.
FRANCHISORS DO NOT FINANCE THE FRANCHISES THEY SELL - THE FRANCHISOR FINANCE QUESTION
Part of the problem we have seen in many cases revolves around the fact that some franchisors do not properly investigate or asses franchisee financial and business qualifications in their sometimes haste to ' sell ' a franchise. Remember always that franchisors ' sell' franchises; they don't ' finance' them - that’s not their business or best use of capital. So take our advice here at 7 Park Avenue Financial and don't spend time talking about a business loan with your franchisor!
DUE DILIGENCE ISSUES TO CONSIDER IN BUYING A FRANCHISE
Does the quality or reputation make a difference in the ability to finance your franchise? While there is probably no ' bad ' list of franchisors available, it's safe to say that many franchises have a reputation of being a bit more ' tried and true ' when it comes to business success. In Canada, the franchisee can deal with a Canadian franchisor or a chain with U.S. or foreign ownership. In some cases, you might be dealing with a ' MASTER FRANCHISE ' - someone or an entity that has purchased the rights to a geographical territory, such as... you guessed it... Canada.
WHAT INDUSTRIES ARE POPULAR IN FRANCHISING
We've observed that for whatever reason, some franchise sectors tend to attract franchisees more than others - they include restaurants/hospitality, training, hair, fitness etc. It's incumbent on you, the franchisee, to demonstrate to your lender that you have both the right combination of passion and experience buy a franchise, run it, and grow a franchise business successfully.
WHO ARE THE FRANCHISE LENDERS IN CANADA
So let's bore down into the actual financing of your franchise. That financing is achieved by either a specialty franchise lender ( they are extremely limited in Canada ), a bank ( highly improbable ), a bank via the SBL loan ( highly probable by the way !), and a combination of assorted financing services such as leasing, merchant advances, working capital term loans, etc. The Canada Small Business Financing Program is our Canadian version of ' sba loans' in the U.S.. Borrowers are always concerned about interest rates and the interest rate on the Govt loan is very attractive - Note however franchise business owners need a good credit score and personal good credit history. The bottom line make sure your personal finances are in order. Let 7 Park Avenue Financial walk you through this great program.
DO BANKS FINANCE FRANCHISES
So, getting back to... the bank! While all our Canadian banks have franchise ' units,' they heavily focus on arrangements with only the most popular, large and successful chains.
STARTUP FINANCING IS ALWAYS A CHALLENGE IN BUSINESS
Traditional financing for a start-up is not available without the franchisee putting up as collateral significant personal collateral, aka the home, savings, etc. Typically that's not desirable for the franchisee! Simply speaking, you might find that the guy in the bank commercial on TV is not the lender you deal with in the branch! The franchise fee itself is not financeable and is typically paid directly by the franchisee. Bank loans for a new franchise require an extensive application, including a business plan and cash flow projections, depending on the type of loan you are looking for- 7 Park Avenue Financial business plans we prepare for clients meet and exceed lender requirements.
In some cases your franchise agreement might even include a real estate component which is typically addressed and financed separately.
CONSIDER THE GOVERNMENT OF CANADA SMALL BUSINESS FINANCING PROGRAM TO FUND YOUR FRANCHISE PURCHASE
We referred to the Canadian SBL loan above; it’s a concrete way to finance your franchise if you meet some essential criteria. That includes a reasonable down payment, a decent business plan, good personal credit history; the loan only finances equipment and leaseholds, but more often than not, that’s the bulk of the financing needed. Personal guarantees under the program are also limited, which is attractive.
CONCLUSION
Typically you want to have a ' team ' to ensure legal and financing issues are in place to help cement success. That might include your lawyer, an accountant, and... when it comes to financing a trusted, credible and experienced Canadian business financing advisor. You'll be in better shape to navigate those business and financing headwinds with solid financing options.
Click here for the business finance track record of 7 Park Avenue Financial
Stan Prokop
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