How to Pay For a Franchise

You may be interested in opening a franchise. Franchises offer several benefits over traditional non-franchise businesses. When you purchase a franchise, you buy an established trade name. This trade name will eliminate some of the risks associated with starting your own business. However, you have probably noticed that opening a franchise can be quite expensive. In addition to the normal operating expenses, such as buying or renting real estate, payroll expenses, buying supplies, buying equipment, paying utilities, and other expenses, when you purchase a franchise, you must pay a franchise fee and pay a certain percentage of future revenue to the franchiser. You probably have wondered how to pay for a franchise. Fortunately, there are several options available to prospective franchise buyers for how to pay for a franchise.

Franchiser Financing!

Some franchisers will finance the franchisee. Each franchiser has the discretion whether or not to finance franchisees. Several will not offer financing, while others will only offer financing for certain costs.

If the franchiser will not provide financing, the franchiser may offer help in obtaining financing. The franchiser may let the franchisee know about preferred lenders.

Third Party Financing!

If your franchiser will not provide financing, then you will have to find financing on your own. You can look to banks in your local area. Some banks specialize in providing financing to small business owners and individuals looking to purchase a franchise. It is best to take some time to shop around when looking for financing from banks. Each bank will have different interest rates and different terms.
Make sure that you are familiar with the terms of the loan your are applying for. Loan documentation can be very complex. It may be a good idea to have an attorney help you out with the process.

Friends and Family!

Perhaps you have some friends or family who has some extra money lying around. See if they would be willing to invest the money in you and your franchise. In return, you should offer them some sort of return on their investment. Beware however; when money is lent between friends and family, it can turn ugly. If the people you borrow the money from are not repaid, you may end up ruining the relationship. You must be very careful when choosing this route.

Pay in Cash!

Another option, if you have enough wealth, is to just pay for the entire cost of the franchise with cash. You will have to ask yourself if you want to tie up all your money in your business. Sometimes it is best to borrow the money so that you still have your cash on hand for other things that come up. However, the obvious advantage of paying with cash is that you will not have to pay any interest on the cost of opening your franchise.

Seek Advice!

When deciding how to pay for a franchise, it may be a good idea to seek help. Asking for the assistance of an attorney or other franchise owners could help you decide which of the above ways will be the best way to pay for your franchise.

Edward Dean is an accomplished website developer and author. To learn more about how-to-pay-for-a-franchise [http://cidsys.info/Educational_Articles.html/] visit Franchises Now [http://cidsys.info/Educational_Articles.html/] for current articles and discussions.
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