Almost every career-minded individual salivates over the prospect of going independent and doing his or her own business. There are different ways to become an entrepreneur, and franchise is one of them. A franchise opportunity is pretty much a proven business template that you need to build up from. However, capital or financial investment could be a major hurdle for many. A franchise doesn’t come free. There is the franchise fee, and also advertising costs and ongoing royalties. Fortunately, there are finance options for franchise purchase that could come to your rescue.
Franchisor Financing
Franchisor financing is seeking financial support directly from the prospective franchisor instead of a third party. Several corporations that provide franchises also offer customized financing solutions designed exclusively for their franchisees. This could be either via alliance with particular lenders or the corporation may provide the funds from its own pocket.
Commercial Bank Loans
A commercial bank loan is another common franchise financing route. Under this financing model, a lender or bank offers some cash up front. You later repay this cash as monthly installments, which includes interest money. The lender would invariably review your personal credit history and also business plan before offering you the money. The better your credit score and financial history, the likelier are the chances of you bagging a loan with lower interest rates and better terms.
Alternative Lenders
Franchise lending via an alternative lender is an option too. Usually, alternative lenders’ loan requirements are less stringent, but the turnarounds are shorter when compared to regular financing options. These lenders offer a range of loan options, including equipment financing, term loans and business credit. However, alternative lender loans could be a bit on the expensive side, thanks to the convenience and access fee.
Crowdfunding
If you cannot practically avail franchise financing, and the banks and other lenders are also not accommodating your needs, you may go the crowdfunding route. In case you didn’t know, crowdfunding is sourcing money from the people. It is a fairly new way to procure money for launching a product or business. If you’re going this route, you may opt to set up and promote your own crowdfunding page. Or, you could seek help of certain firms that do crowdfunding for franchises and businesses.
Family and Friends
Obtaining loan money from friends and family is another option. Such loans are interest-free and also do not come with the formalities and stress usually associated with traditional loans. But, on the flip side, there are chances of family disagreements and lost friendships if you don’t repay the money on time.