Franchise financing is a process of sourcing for funds to enable franchisees access rights and licensing of intellectual property, working procedures, brands and business models of established organizations. It’s a key aspect of an institution’s growth; therefore, various fundamental aspects are necessary for the success of a franchise.
Financial franchising is the main denominator in ensuring the growth of a franchise. There are various ways to access capital to build a franchise. However the following 4 ways are the most common and reliable:
In order for your franchise to pick up, the main proprietor can offer financial help to boost the franchise. Because the franchisor has a brand to protect you get assistance even though there are pre-established working financial plans. Moreover, some if not all the major organizations are looking to expand into other markets. Thus, when you approach them with a new idea of a market they deem viable, you can acquire instant financing due to your capabilities.
Commercial Bank Loans and Other Lenders
This may not be the best way to start a business, however it’s a viable option in case you require quick capital. Because most major organizations have a track record of success. Receiving a loan could be easier with assurances of partnership with the franchisors. Although the liability may depend on you as the franchisee, it’s a big gamble that could pay off. You can say the benefits outweigh the risks.
Family and Friends
Obtaining funds from family members is a bit tricky, but if you pull this off it’s one of the least risky maneuvers. Even though capital from friends and family might come with strings attached, it’s a more friendly approach towards establishing a franchised business. The main advantage is the social and economic security a loan from a family member gives you. This enables you to concentrate on the growth of the business.
In this modern era crowdfunding, there has been an important set up in establishing startups. Through this idea, you can also build a platform showing franchisors and investors what you can do. This will enable you to pass on your ideas either online or in boardrooms. Whichever medium that works will enable you to have a platform to launch your franchise without any strings attached. This is also an added advantage to help you in advertising and creating a customer base.
The ways discussed above enable you to have a plan while establishing a franchise. Because of globalization more organizations are turning to franchising to expand their networks. Hence, a franchise model is tipped to work as long as you follow the stipulated guidelines established by the parent organization.