Franchise Finance
So you want to be your own boss, but wants the comfort of a well know brand to help you on your way - franchising could be for you. Buying a franchise is probably one of the biggest decisions in a small business owner's business life. With so many to choose from franchising offers unparalleled opportunities to budding entrepreneurs.
We have access to franchising experts at the major banks who often have special schemes for particular franchises. We can help by putting together a financing proposal for you in conjunction with the business plan you'll be providing to your franchisors. For well known franchises where you have industry experience and are buying an established franchise, you may be able to borrow up to 60% towards the cost of the franchise, using the business as security. If you are inexperienced or setting up a greenfield site, the amount you can borrow against the business may be reduced to 40% of the cost. The term of any loan will be determined by, amongst other things, your cash flow, the term of the franchise agreement and any lease terms for your premises. Normally 5-7 years is the usual length of these loans.
Once you've determined your initial investment in a particular franchise, you will need to think about how you will fund the day to day running costs of the business. Working capital, or the cash used in a business will vary between franchises, and it’s important to account for working capital costs prior to investment. Discuss with your franchisor about the formula they use to calculate this and we can then discuss options for you to fund this, which may include adding it to the loan or via an overdraft facility.
The information you'll normally need to provide for us to get started is:
In addition to funding secured against the franchise, if you're a home owner, we'll also explore what funding may be available secured against your home and provide you with some options to figure out what's best for you.
We have access to franchising experts at the major banks who often have special schemes for particular franchises. We can help by putting together a financing proposal for you in conjunction with the business plan you'll be providing to your franchisors. For well known franchises where you have industry experience and are buying an established franchise, you may be able to borrow up to 60% towards the cost of the franchise, using the business as security. If you are inexperienced or setting up a greenfield site, the amount you can borrow against the business may be reduced to 40% of the cost. The term of any loan will be determined by, amongst other things, your cash flow, the term of the franchise agreement and any lease terms for your premises. Normally 5-7 years is the usual length of these loans.
Once you've determined your initial investment in a particular franchise, you will need to think about how you will fund the day to day running costs of the business. Working capital, or the cash used in a business will vary between franchises, and it’s important to account for working capital costs prior to investment. Discuss with your franchisor about the formula they use to calculate this and we can then discuss options for you to fund this, which may include adding it to the loan or via an overdraft facility.
The information you'll normally need to provide for us to get started is:
- A copy of your business plan
- A copy of your cash flow and profit and loss projections with assumptions
- Details of your personal assets and liabilities
- Your updated resume
- A copy of the franchise agreement (even a draft will suffice)
- The last 3 years financial accounts for a existing business purchase
In addition to funding secured against the franchise, if you're a home owner, we'll also explore what funding may be available secured against your home and provide you with some options to figure out what's best for you.
