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Overcoming Franchise Funding Fears

Contributed by Franchise Financing Partner Guidant Financial Group.

You want to dip your toe into the waters of business ownership and have decided to jump into a franchise. Maybe you’ve zeroed in on which franchise is right for you or perhaps you’re still exploring the options. Whatever you decide, you’ll need a way to finance the venture, and that can be intimidating. Getting a business loan can be tricky… even as the economy begins to heal. If you’ve got money, banks and credit unions will line up to loan you even more. If you don’t have money? Well, take heart—here are some alternative funding options that can put you at the helm of your own franchise:

  1. 401(k) Rollover, or ROBS (Rollover as Business Startup) If you have a retirement account, there’s a way to use it to finance your entrepreneurial dreams. Here’s how it works: You form a C-Corp that will operate your new business. You create a new 401(k) into which you rollover your existing retirement account. Then the new 401(k) buys stock in the C-Corp, and you’re in business. The caveat is it needs to be set up meticulously to avoid tax and penalties. Our partners at Guidant Financial are the dream team for this sort of financing.
  2. Portfolio Stock Loans - Tapping the value of fully-paid stock can be a way to secure cash for your business. Investors are basically pledging the value of their stock portfolio as collateral for a loan. In the best case scenario, your stock’s value will increase over the loan period enough to cover the interest. If your money is tied up in your stock portfolio and you need cash to get your business off the ground, this is a viable option.
  3. Unsecured Credit It’s called “unsecured” because the debtor does not provide any collateral. If you don’t want—or are unable to—put property or equity in property up as collateral and your personal credit is very good, an unsecured line of business credit can be a good way to get your hands on start-up capital. For a new business your application will most likely include a business plan and up to three years of earnings projections.

If you’ve got ambition and drive, but lack the liquid funds to purchase your slice of the American Dream, one of these alternative funding options may be the right choice for you. Remember to investigate business opportunities and financing options diligently.

To request information on Guidant Financial, CLICK HERE

FlipFlop Dogs: Why We Started the Veteran Franchise Giveaway

veteran, as a small token of our appreciation and gratitude for all they have done for our country.

Franchisor-Franchisee Independence and Joint Liability, Redux

In the Tilted Kilt case, the franchisor allegedly published an “employee handbook” for franchisees to distribute to their staff, and exerted significant control over the operation of the franchised outlet in question. If true, these are two factors that typically weigh in favor of finding the franchisor to be a “joint employer” with its franchisee, thereby potentially subjecting it to liability for the alleged harassment.

Determining Your Priorities

At its core the decision to open a franchise isn’t a trivial decision. You are making a serious investment, but if you take all of the factors into account it can be an amazing one. But before you get there you need to sit down, analyze your needs, capabilities and limitations in relation to a franchise business. This could take a few days to consider or a few weeks or months. In either case, it is one of the most important steps in the franchising process, so don’t skip it.