YOU’RE LOOKING FOR FRANCHISE FINANCE!
FINANCING A FRANCHISE 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 - sprokop7parkavenuefinancial.com
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Franchising loans in Canada, properly obtained and constructed, help guarantee entrepreneurial success for prospective franchisees. We're going to unlock some of those ' secrets’ to help ensure that success story. Let's dig in.
THE CHALLENGE OF FUNDING A FRANCHISE PURCHASE
Notwithstanding the tremendous growth in franchising in Canada, we can categorically say that there's no ' easy money ' on the table when it comes to this type of loan or finance solution. In fact, we can safely say that many of the requirements of any business loan application to almost all franchise scenarios.
WHAT AMOUNT OF DEBT SHOULD YOU TAKE ON TO PURCHASE A FRANCHISE
So it becomes a question of leverage ( the amount of debt ) the franchisee can take on, the collateral value of assets being financed ( equipment, leaseholds, real estate, rolling stock ) and the owner's business experience. When it comes to a traditional bank loan understanding your future cash flows is key to buying a new franchise or an existing franchise and assessing repayment terms and obligations. The type of financing options and the overall type of financing program you choose will have payments that will vary greatly based on size, interest rate, etc.
THE IMPORTANCE OF FINANCING NEEDS AFTER YOU PURCHASE
Often overlooked or forgotten is the franchisee's ability to misgauge the working capital and growth financing that might be needed post-acquisition. While, in some cases, it might be assumed your business will lose money in the early stages, it clearly makes sense to focus on cash flow and profitability from day one.
CAN YOU BUY AND FINANCE AN EXISTING FRANCHISE?
We meet with many franchisees who are interested in or in the process of acquiring an existing franchise. Getting past the fact that the franchisor itself must approve this type of sale, it's absolutely critical to determine what levels of success (or distress) the business was experiencing pre-purchase. This necessitates a strong look at existing financials, personnel, market conditions relocation, industry growth, etc.
DO BANKS PROVIDE LOANS IN CANADA FOR A FRANCHISE BUSINESS?
While it might seem logical that Canadian chartered banks are the predominant financier of franchises in Canada, this might actually not be the case. While the banks do, in fact, align themselves with the big names in the business, those franchises are often, for the obvious reasons, more expensive and require much more capital investment and personal financial commitment.
The importance of a good credit score and personal credit history can't be overemphasized in financing your franchise via business acquisition term loans. The franchise fee is typically paid directly and is not financed as part of your franchise loan.
In some cases, real estate might be a part of your franchise and bank loans or mortgage financing around this aspect of your purchase and is typically handled via a separate financing, probably as part of a holding company or separate entity outside the operating business.
WHO FINANCES FRANCHISES IN CANADA? WHAT ARE FINANCING SOLUTIONS AVAILABLE?
The reality in small business and Canadian franchise financing? It's that most operations are financed by a small handful of specialty lenders, as well as those borrowers to choose to opt for the Government Small Business Loan (aka the ' SBL ‘). Other forms of supplementary financing are also utilized and available to borrowers - they include equipment lessors, term lenders for working capital loans, merchant advance cash flow financiers, and loans secured by personal assets of the franchisee, the latter not recommended. The government loan has an attractive interest rate.
Franchisor financing in Canada is generally not available as part of your franchise agreement - your franchisor sells franchises - it does not finance them - that's your challenge as part of the burgeoning franchise owners industry in Canada.
CONCLUSION
If you're looking to be successful in business loans and want to navigate the tips and tricks of the franchise finance maze in Canada, seek out and speak to 7 Park Avenue Financial, a trusted, credible, experienced Canadian business financing advisor who can assist you on the journey to entrepreneurial success. We'll show you the options available and navigate the application process for you!
P.S. We will also prepare a business plan that is required - 7 Park Avenue Financial business plans meet and exceed bank and commercial lender requirements.
Click here for the business finance track record of 7 Park Avenue Financial
Stan Prokop
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