Learn these Tips for Financing a Franchise Business
There are many different routes one can take when trying to generate funding for UK franchises, whether you choose to take out some money from your retirement funds, take loans, get financing through your franchisor or borrow from your family and friends.
Financing a franchise can seem very daunting for aspiring franchisees, but it does not have to be as difficult as it sounds. Here are a few useful tips franchisees should know for financing their franchise.
The Basics of Franchise Financing
These are a few basic things you should consider when deciding how to finance your franchise:
• Figure out the total cost of financing, including the fees, interest rates, operating costs etc.
• You will have to consider which personal assets you can keep as collateral.
• Many low-cost franchises, part-time franchises, and van based franchises already have third-party financiers on board, so be sure to clear out all the terms and conditions and financing options beforehand.
• Work out how the total and monthly costs will configure into your expected ROI.
• If you have taken loans, work out over what time period you will be required to pay it back and how the rates of interest will change according to your payment plan.
How To Improve Your Financing Odds
An ideal borrower is positive in the 5 C’s: credit, collateral, character, capital, and capacity. Even if you lack in one of the areas, you will still most probably be given loans, but the more C’s that you can show going in your favor, the more chances you will have for raising the needed capital.
Related Post: Gain Financial Security through Buying a Franchise
Here is what you can do to increase your financing odds:
• Have In-depth knowledge about the franchise UK you are interested in buying.
• Review the franchising document/contract with your accountant and lawyer in detail.
• Create a detailed business plan that includes financial projections.
• Do not do anything to meddle with your credit score.
• Make sure to have your security deposit ready.
Find the work-life balance you always wanted. Get in touch with Franchise UK for more information on how to become a franchisee.