Funding a Franchise
Franchising often comes with an up-front cost, but that shouldn’t put you off. Franchising is an investment for your future, where time and nurturing will maximise the payoff you receive. It has also proven to be a much safer business model than starting a business on your own.
As with most personal investments, i.e. university courses or purchasing a new home, there comes a need to review finances and explore additional funding opportunities. Franchisors , like Century 21 UK, will help you put together a business plan to support in the funding process;
There are a range of grants available to new start-up businesses, and that includes new franchises, locally and through the Government. You can check the gov.uk website for the current available grants that are available.
Once you’ve found a grant that fits your requirements, speak to the franchisor to start the application as soon as possible. Acting quickly will help to reduce the number of other entrepreneurs applying for the grant in the same industry as yourself but, at the same time, don’t rush the application. Errors and mis-informed information could hold up the application, putting a delay on you starting your franchise journey.
BFA-approved grants are also an option. The British Franchise Association have partnered with reliable and trustworthy businesses to help support more entrepreneurs in getting on the franchise ladder.
Banks often see franchising as a less risky business model than setting up an independent business on your own. Resulting in a usually easier route to secure funding for running your own business.
We advise researching the different loans available. Going directly to your bank may have a higher interest rate than other providers, and it’s important you can keep up with repayments going forwards.
You’ll need a business plan to apply for a loan. The lender will use your business plan to assess your finances and a reliable cash flow forecast to determine how profitable your business is likely to be.
Another option for financing a franchise is to go into franchising with a partner. Going into partnership with friends or family is a great way to help share the responsibility of running a business. Going 50:50 on the initial start-up fee, running costs and the work involved in keeping business flowing helps set your business off on the right foot.
Nonetheless, being a joint business owner comes with pros and cons. Your partner should have the same dedication and commitment as yourself and the master franchise to make it work. Consider all your options and it’ll help prevent complications further down the line. Franchisors can support in this area with guidance and expertise if it’s an avenue you’re looking to consider.