Your Antidote On How To Finance A Franchise Loan In Canada - Secrets of Franchise Financing Companies / Banks

Canadian Franchise Financing Tips and Info


Information on how to finance a franchise in Canada . What do you need to know about franchising companies and banks to successfully complete a loan / financing.




Entrepreneurs searching for their ' antidote ' to the question ' how to finance a franchise ' in Canada seek to unlock the secrets of banks and franchising companies in Canada. We think we have earned the right (via experience) to have learned and now share some of those tips, secrets, and strategies on successful franchise financing in Canada.

You're somewhat close to being successful already when you have chosen to purchase a franchise in Canada, simply because you're buying what is hopefully a proven business model that has a higher probability of success oftentimes than starting your own firm. And it’s a two way deal; because your franchisor needs you to be successful that is how they succeed themselves!

Canada also has solid franchise disclosure rules and regulations, which help protect the investment you are about to finance - and that’s a good thing!

Naturally the goal of your business is to be profitable, so significant care should be done around your investigation into the overall profitability model - remember also that those profits pay back your franchise loan / loans.

To finance a franchise in Canada, successfully, revolves around two key concepts: knowing your start up costs, and being able to assess ongoing working capital needs. The latter is sometimes forgotten or receives less attention, and that’s not good!

Assessing your start up costs and ongoing working capital and cash flow needs involves the financial portion of your business plan. It's not as hard as you think, it’s just a simple case of taking a basic spreadsheet and focusing on the inn’s (your projected sales)... and the outs... your expenses in each category. Those include rent, royalty payments, and a salary draw for yourself, your cost of goods ... etc. At the end of the day it’s highly desirable to have money left, aka ' profit'!

In Canada franchise loans are usually 5-7 year term long; occasionally they might be longer but certainly in our experience 5-7 is the norm.

There is a limited, in fact, only one full service franchising company in Canada that provides financing. They tend to be involved in larger national programs, and can assist with acquisition financing, refinancing of a current location, new builds, and in some cases real state if in fact that’s required. A very heavy focus is placed on traditional cash flow coverage. To non financial people we can simply explain that if your debt is 1 dollar in your business you have to be able to prove or demonstrate cash flow of around 1.25 ( a buffer is created ) to pay back the financing . Transactions from this firm tend to be larger in size.

But what about the hundreds of other firms out there who may not be aligned under such a program? Where do their franchisees go for help? Here is where it’s prudent to talk to two folks; one is a trusted, credible and experienced Canadian business financing advisor who has experience in franchise finance. The other is a guy name ' BILL ‘. Actually, that’s B I L, and it stands for a specialized loan program that perfectly suits what many franchisees are attempting to achieve in a solid franchising loan. It also have very attractive rates, terms an structures that even larger more established firms cant achieve, i.e. lower personal guarantees, no penalty to repay, etc.

So, bottom line. As usual its focus on a franchise model that makes sense and suits your experience. Be prepared for a reasonable equity investment on your part, and seek the services of either a very specialized franchising companies that focus on finance, or, even better, the help of an expert who can package a solution that suits your individual situation. Those are solid antidotes to the ' how to finance a franchise ' question!




Stan Prokop - founder of 7 Park Avenue Financial -


http://www.7parkavenuefinancial.com


Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing .Info re: Canadian business financing & contact details :


http://www.7parkavenuefinancial.com/how_to_finance_a_franchise_franchising_companies.html

What Every Entrepreneur Should Know About How To Finance A Franchise In Canada – Financing Your Investment

Canadian Franchising Finance Explained

Information on how to finance a franchise in Canada . Best methods for financing your entrepreneurial decision in this business investment.



It tends to start with the franchisee fee itself, but there are a number of other financing challenges that come into play when the Canadian entrepreneur is faced with the basic question - ' hot to finance a franchise ' in the Canadian marketplace. Financing one of the most important business investments you'll make can be a challenge - so let’s identify some key issues, tips, and strategies on being successful in this challenge.

A solid way to look at finance success in your franchising ' adventure' is to break down your estimated costs into several key areas. Most potential franchisees don’t realize that each key aspect of your franchise purchase is financed in a different manner.

Lets breakdown the key elements of a franchise investment. They include the franchise fee itself, which we have already referred to. Other components usually equipment you may need, leasehold improvements to any new facility, potentially real estate , as well as the often forgotten but as important on going working capital .

Our experience is that the franchisee typically in Canada has to cover the franchisee fee him or her self. That then leaves our other components to address. So is financing a franchise in Canada a challenge ?In some respects it has the same challenges as if you were opening any new business from scratch - however, the good news is that the financing industry as a whole tends to view franchises positively because franchisors, when successful, have proven brands, track records, etc .. in general they are considered, we think, a lower risk that many other ' start ups'

We sometimes forget to mention to clients the possibility that they may be in fact purchasing an existing unit from the franchisor - that typically involves buying a company or corporate location that the franchisor wants to sell, or, in some cases purchasing a franchise from an existing franchisee who is motivated to sell for whatever reason. Bottom line, both new and existing franchises and be financed.

We are quite sure that when most franchisees consider how to finance a franchise investment they think that financing might in fact come from a Canadian chartered bank. Well, here’s the facts on that one... it does... and it doesnt. While it is somewhat rare that your bank would directly finance 100% of you franchisee needs under a normal term loan scenario the banks do play a key role in franchising in Canada.

How? They do it under the auspices of the Canadian BIL/CSBF program which offers a competitive term loan for Canadian franchisees under the umbrella of this program. The benefits of that program are significant - they include financing up to $, 350,000.00 as well as a low personal guarantee. Rates are excellent, and terms are flexible. Criteria for the program essentially are a decent personal credit history of the prospective franchisee, as well as a respectable owner investment into the business.

Whats respectable?! We knew that question was coming next. Typically to be successfully anywhere from 10-40% investment is required by you as the franchisee. While one commercial finance firm in Canada dominates franchise financing individual franchisees can compliment financing needs with equpment financing, business lines of credit , business credit cards, and the increasingly popular merchant advance loans for retail oriented businesses.


Both having a finance plan and knowing how to execute on your plan are what will make you successful when you are faced with today’s questions ' how to finance a franchise ' ... Speak to a trusted , credible and experienced Canadian business financing advisor for help and tips you need to be successful as a franchisee entrepreneur in Canada .



Stan Prokop - founder of 7 Park Avenue Financial -

http://www.7parkavenuefinancial.com


Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing .Info re: Canadian business financing & contact details :


http://www.7parkavenuefinancial.com/how_to_finance_a_franchise_financing_investment.html

How To Finance A Franchise In Canada – Make Franchise Financing Work!

Is there a perfect, foolproof method on how to finance a franchise in Canada? Naturally there are no sure things in business, but financing a franchise has a 99% chance of success, if, and it’s a big if, you are prepared and have expert knowledge on how this type of business financing is done in Canada.

It’s not secret that franchise finance is hot! From the downsizing of companies in Canada and the U.S. to simple entrepreneur dreams thousands of would be ' business owners' are looking to explore the franchise dream for personal and business success.

Franchise financing pays off, as we said, if you are well prepared. You also have to be in a position to understand that the concept of OPM, or ' others peoples money ' doesn't work in any business, let alone a start up franchise. By that we simply mean that you have to have somewhat of an investment to make in the business. Those funds must be accessible and you have to be in a position to demonstrate the source of those funds.

Typically our clients make their equity deposits into a franchise business from savings, or friends and family type donations. In many cases they have either liquidated assets, i.e. savings, or perhaps collateralized their home via personal line of credit, etc. The bottom line is simply that you should generally be in a position to put 30-40% down as your own investment in the business.

You are now in a position of being able to find the remaining funds you need to both purchase, and of course run the business on an ongoing basis.

We will now show you have to finance that franchise. First of all, ensure you have a proper cost breakdown. That should be broken down into soft costs and hard costs. Soft costs are typically items such as the franchise fee, etc. The real hard costs are the assets and leaseholds and equipment you are purchasing, which should be broken into those three categories.

As much as clients hate to do it, you need a business plan that describes you, your experience, the business, its potential. When you address the key issue of how to finance a franchise you must demonstrate in the financial section how your loan or newly acquired debt will be repaid. If you don’t have experience in preparing such a plan an expert can prepare one fairly economically - we view it as a true investment in financing franchise businesses.

So who exactly is in the franchise financing business in Canada from a lender perspective? One guy is BILL. That's an attempt at humor, as the BIL program, formally known as the Business Improvement Loan program is by far the largest funder of franchise in Canada. That program, coupled with some specialty lending in the areas of equipment and working capital allow you an excellent chance to get your franchise financed.

In summary, when addressing how to finance a franchise in Canada know your costs, summarize your proposal in terms of yourself, the business, and its financial potential, and ensure you are in a position to present the transaction in a professional manner to an experienced franchise financing lender. Speak to a credible, experienced and trusted Canadian business financing advisor if you need assistance in your entrepreneurship financing goals in franchising.
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Stan Prokop - founder of 7 Park Avenue Financial -
http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

http://www.7parkavenuefinancial.com/how_to_finance_a_franchise_franchise_financing.html