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I am a franchisor. New franchisees need to pay between $20k and $35k to join the group. What's the best way to arrange to finance this fee as a new franchisee?

4 years ago

Responses

Hi Jonathon,

Exciting times for you!! Generally to be able to obtain finance for your upcoming venture you would need to have some sort of equity. This would be in property or in a cash deposit.

We can take out a line of credit / business loan in order to do this depending on the options available to you.

You will need to show evidence of servicing the loan with the reduced income in the initial stages of your business so that is something to keep in mind too.

Business loans will always have a few variables that come into the equation such as industry history, historical income (if buying from someone else) projected income etc.

Always happy to discuss your personal situation further - good luck in your new venture!

Nicole

Hi Jonathan

Congratulations on setting up your business for growth, sounds exciting.

Whilst you need to be careful in the commitments you make to potential franchisees there is nothing wrong with providing some options or guidance on how they might be able to finance the purchase of the franchise. Ultimately it is their choice as their individual financial position will dictate how they go about the purchase.

I would suggest you make contact with your own bank and see if they have business finance solutions. If they see your business model growing and get to know more about the business they may see some value in developing a finance option for your franchisees. You could also speak to some non bank business finance options such as Prospa or OnDeck and see if they’d be prepared to listen to what you are looking to set up.

Best of luck in the business

Paul

I assume you aren't accredited with a bank. So from cheapest to dearest, loan against real estate, personal loan, credit card, vendor loan, friends, family. The other option is to partner up with someone who has money and is willing to take a minority stake. If it's a food franchise there might be options with Silver Chef, ask your equipment dealer or link up with me at LinkedIn and I can provide information.

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