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Gaining Financing for a Franchise is Getting Easier

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It is easy to see why getting franchise loans may be somewhat easier than gaining financing for other types of small businesses. Franchises, to some degree, come with their own set of marketing research and sort of a ready-made business plan that takes a lot of work out of the business owner’s hand. It also mitigates a lot of risk for the lenders.

 
A new franchise is essentially of an old business in a new location, and the only thing necessary to prove is that the specific business will be successful in that location. This is much different from convincing a lender that a whole new business or product will be successful.
 
Wendy’s is on the Rise
 
Look at the case of Wendy’s. GE has coughed up the funds to remodel the Wendy’s stores, which itself shows that the lending world is warming up once again to the idea of funding franchises. This is occurring much faster than it is for independent small businesses.
 
What does this mean for those looking to start a franchise of some sort?
 
Do Your Own Research
 
Even though it may seem that a franchise’s success can speak for itself, they are not all the same. First, research the internal funding options at the corporate level. Then determine what services they offer as far as help with outside funding. Will they provide you with a business plan and market research, or help you find someone to help?
 
More established franchises are much more likely to offer these services, which is one reason they are easier to work with on some level. Newer franchise operations are not as well established and may not have much of this information at their fingertips. This translates into more work for you.
 
Get to Work
 
After those options are exhausted, move forward, but do not feel like your work is over. The franchise corporation may offer help in the form of a business plan and such, but you still must convince a lender that you can run that business. Be certain you present yourself as professional. This is relative to the proposal as well as your personal dress and attitude. The great thing is, hopefully there will be little explaining about the business since it is a known entity. Even with a newer franchise, there should be information available for you to provide to the lender without having to explain too much on your own.
 
This article was originally published by Biz2Credit
Published: October 30, 2013
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