Question
I'm looking into franchising a business and wondering what exactly this means?
I'm just mildly looking into it to see if it's something I'd want to do, so that's why I'm asking here. As of now I know little about such ventures.. Anyways.. "The estimated initial investment is between $1,275,000 and $2,025,000, including a $75,000 franchise fee. " What do they mean exactly? I have to have 1,275,000 current net worth, or I'm going to have to pay that much over the course of time? Or what?
9 months ago - 1 answers
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Franchise financing. Apart from your local bank, the options fall under these categories: SBA Financing The U.S. Small Business Administration (SBA) guarantees loans for private banks/lenders. Specialty Franchise Financing There are commercial lenders that specialize in franchise financing through equipment leases and structured term loans. Companies such as FranFund or Guidant, which live in this market every day, can explain potential strategies you can use in your financing efforts. The Franchiser Many franchise companies either offer financial assistance themselves or help franchisees finds a bank or other lender. Most have a list of "preferred lenders". Personal Assets Whether it's SBA or non-SBA franchise financing, anywhere from 15% to 30% of the total capital need can be required of the borrower. Franchise start-up costs vary wildly across franchises, so this could be anywhere from $20,000 to $200,000. A borrower may need to refinance their personal property or liquidate stocks, bonds, IRAs, 401k, etc. If possible it would be best if an individual could obtain the credit they need using business credit instead of personal credit, so that personal assets are not at a full risk. Also banks are more apt to loan more money to a business than to an individual.
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by Tom Z
9 months ago
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