YOU’RE LOOKING FOR A FRANCHISE FINANCING SOLUTION!
OPTIONS AVAILABLE FOR FUNDING YOUR FRANCHISE PURCHASE
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
Suite 301
Oakville, Ontario
L6J 7J8
A franchise business loan in Canada seems to be viewed by some as a ‘gamble’ on franchising finance success. We certainly have never looked at it that way, and if you follow that famous Boy Scout motto (BE PREPARED!) you'll be viewing financing your franchise in terms of a strategy, not a gamble! Let's dig in.
YOUR FRANCHISE PURCHASE MIGHT REQUIRE DIFFERENT TYPES OF FINANCING
Various types of financing might be required by a franchisee. The most common is probably a term loan - typically with a 5-7 year term, a fixed interest rate, and a therefore predictable monthly outflow of cash in terms of the loan. Naturally, the amount of the purchase, coupled with your down payment or equity installment determines the ' monthly damage'!
A CASH FLOW FORECAST IS CRITICAL
In almost 99.99% of the time your ability to repay the loan will come from sales and profits you generate in the business. That’s where a serious amount of time needs to be spent on your cash flow forecast - it’s a task not loved by all but very necessary. And frankly if you don't want to do it yourself there is a lot of help available from your banker, accountant, or a Canadian business financing advisor.
PREPARE CONSERVATIVE AND REALISTIC FINANCIAL PROJECTIONS
We often hear the expression that you shouldn’t assume anything. However, assumptions in your cash flow forecast are critical relative to revenue growth, expenses, owner draws, future investments required in the business, etc.
THE PERSONAL GUARANTEE
Security for a franchise business loan in Canada typically is the personal guarantee of the borrower, as well as the collateral financed inside the business. That typically exists of equipment and leasehold improvements.
If the franchisee is dealing with either a specialty lender or utilizing the Canadian small business loan program to finance the business typically no outside collateral will be required. That tends to be great news for the wives and husbands of new franchisees who don't have to put the family home on the line. We see many franchise owners that mortgage their homes to purchase a franchise - in hindsight, this tends to be a failed strategy - in essence, they have ' too much' equity in the business and are putting personal assets at risk in case of problems down the road.
By the way, your personal credit score and credit history is very important to franchise funding success and you should make sure that score is available, especially if you utilize the Government Of Canada Small Business Loan to fund your franchise - as do hundreds of others. This program is the counterpart of U.S. 'sba loans' that you might have heard of. This type of loan has a flexible repayment term and even allows for prepayment without penalty.
This loan does not cover the franchise fee, which is typically paid directly by the franchisee to the franchisor as part of your franchise agreement application. Franchise fees and royalty fees vary greatly depending on the nature of the franchise you are considering.
Both a new franchise or an existing franchise can be financed in Canada, and in some cases, franchisees might have to consider a real estate component as part of their transaction.
Don't forget also that you should assess potential working capital needs for ongoing business growth of the franchise financing solutions.
LET 7 PARK AVENUE FINANCIAL BE YOUR BUSINESS PLAN EXPERT
As we have hinted the success you have in financing your new venture is clearly tied to your business plan / executive summary. Many clients we meet have that ' glazed look' when we start discussing the preparation of their plan. It's a lot more common sense than you think. 7 Park Avenue Financial is a business plan expert and our plans meet and exceed requirements for bank loans and commercial lender fulfillment.
Elements of your plan will hinder, or guarantee franchising finance success.
4 KEY TIPS FOR FINANCIAL SUCCESS IN BUYING A FRANCHISE
Our key tips in this area include:
Focusing on the basics - start-up risk mitigation. Cash flow & profit projections
A clear summary of how revenues will be achieved and how expenses can be contained
Strong focus on the franchisor, the industry you are entering (hospitality, service, etc), client growth, etc - Some good industry data helps re trends, competition, etc
Conservative financial projections that make sense when it comes to making money and paying your franchise loan(s) In fact the business plan can be a great document to revisit on a monthly or annual basis to determine what’s working, what didn’t work.
CONCLUSION
Take the gamble out of franchising finance risk - Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can ensure you've got what it takes to be a franchisee entrepreneur.
Click here for the business finance track record of 7 Park Avenue Financial
Stan Prokop
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