Funding for Franchises

If you’re considering purchasing a franchise, the most difficult challenge will be locating the financing.  There are many avenues in which to look for the financing, but first things first.  Once you have decided which franchise to purchase you must do your research on the company, and the profitability of it’s existing franchises.  Gather this information and create a financial statement outlining the costs of starting up your new franchise venture.  As there are many resources for acquiring financing for franchises, most will not lend the full amount needed to purchase the franchise outright, any necessary equipment, supplies, signage, etc.; so chances are funding will come from several sources.

If you have a rich uncle or an outstanding offer for financial support from a family member, now might be the time to consider cashing in.  Traditional sources for funding like banks, and the SBA are likely to be good sources, as well as through the franchisor.  Many will finance a good portion of the amount, but again, usually not the entire amount.  Even the SBA’s Guarantee Program requires 25-30% of the loan amount to come from the franchisee before issuing a loan.  Additionally, some commercial lenders specialize in franchise financing through equipment leases and structured term loans.