Choose the Right Franchise
Franchise eligibility differs depending on the location and industry of the selected business. It is vital that you research the necessary requirements. A business and financial plan will assist in securing a stable franchise future.
There are a number of start-up and capital costs associated with managing a franchise, including:
- The initial franchise fee
- Capital investment
- Working capital
- Continuing fees
The typical arrangement is that you have to find one-third of the total start-up funds yourself and the bank will lend you the other two-thirds as a business loan, but franchise funding is very competitive. Most banks provide information packs about franchising and financing and can help. If you want to borrow money, they are aware of who is a reputable and successful franchisor, and the level of risk they are taking.
Many franchisors have ongoing relationships with selected banks, so your franchisor may well suggest you talk to a particular bank; although, there is never a guarantee that you will be lent money. Only borrow the money required for the franchise - the BIGGER the loan, the BIGGER the monthly repayments!
Banks that have special franchise finance include HSBC, Natwest and Lloyds TSB.
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