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Identify the perfect franchise for you! Take our short quiz Take our free franchise quiz!

Franchise Financing - Finding the Money

The cost of buying a franchise can be substantial, but you don't have to be a trust fund baby to get into the franchise of your dreams. Where is the funding going to come from? That's the number one question franchise buyers ask. There are numerous sources of capital, but start with these basic steps first.

  1. Talk to the franchisor. About one in three franchisors provide franchise financing directly or have arrangements with third party lenders. You will find any financing arrangements spelled out in Item 10 of the FDD (Franchise Disclosure Document). Even if the franchisor doesn't have money to offer, it is still the best source of information about your financing options.
  2. Look within. It is a common misconception that you can or should borrow all the money to open a franchise. Be prepared to come up with at least 25 to 30 percent of the total start-up costs. To assess personal resources, start by preparing a personal financial statement (you'll need one to present to lenders anyway).
  3. Ask family and friends. This is one of the most common ways to finance a franchise. After all, who knows your dreams and capabilities better? Plus, they want to help you succeed.
  4. Call your accountant. Ask your accountant to recommend a banker. A good accountant - one with small business experience - is usually a great source of leads.
  5. Find a specialist. You should start at the bank where you do your personal banking, but there's a good chance you won't get what you need there. Local banks are often unable to fund franchise projects. Your chances will be much better with independent lenders like GE Capital Franchise Finance that specialize in franchise lending.
  6. Search the SBA Franchise Registry (www.franchiseregistry.com). The SBA's small business lending guarantee program is a key source of loans. This program for new franchise buyers is much easier to access since the creation of the Franchise Registry, a central database of information about franchisors that have been certified by the SBA.

Franchise Buyers Don’t Need a Lawyer – Yeah Right!

These excuses are usually first heard when I meet with a franchise owner who is now asking for advice regarding their dissatisfaction with their franchise relationship. Too late. That is, sometimes it is too late to help them.

Female NASCAR Driver Learns Life Lessons and Transitions to Succesful Franchisee

[Matt Wilson, FranchiseHelp]: Hello everybody. This is Matt Wilson coming from FranchiseHelp.com. I am here with Deborah Renshaw-Parker,former NASCAR driver and Apricot Lane Boutique franchisee. Deborah is coming to us from Bowling Green, Kentucky, where she owns an Apricot Lane franchise. We want to pick her brain a little bit. Thanks for coming on the show.

Prospective Franchisees - The Financial Questionnaire

The first qualification considered and investigated is often the prospect's financial situation, so as a franchise applicant you will need to be familiar with the financial jargon that a franchisor may employ in their questionnaire.