You’ve already selected the particular franchise you want to buy. Do you know how you’re going to pay for it? If you think it’s just a matter of going to your local bank and getting a loan, think again. In addition to other criteria, unless a bank loan is backed by collateral — property acceptable as security (like your home) — you will have a hard time securing one.
When financing a franchise, it is critically important to determine and evaluate any and all financing options available. This decision can have a significant impact on the success of your business; in fact, inadequate financing is one of the top reasons why businesses fail. And why secure a loan from an institution that charges a high interest rate and short-term repayment when there most likely is a more attractive and affordable alternative? Finding the financing option that works best for you will go a long way toward laying a secure foundation for your franchise’s success.
Be aware that most lending institutions expect to see a solid business plan, and at least 25 to 30 percent of the capital needed coming from you.