Do you want to buy a franchise to secure a future for you and your family? That’s a great idea! Sure, we at Best in Class may be a little biased when it comes to the franchise business model, but it’s only because we regularly see how positively it affects the lives of motivated entrepreneurs.
Of course, when you decide it’s time to own a franchise, success is not going to be immediate. Profitable franchises don’t come to be with a snap of the fingers. As with any business, there is some work involved in getting the operations going, and a big piece of it is securing funding. Fortunately, we have some advice that will help you navigate this process. Below are the do’s and don’ts of finding funding for your new franchise!
Similar to pre-qualifying for a home loan, there is no one-size-fits-all loan amount for franchises. In fact, depending on the franchise brand, you could be looking at anywhere from $20,000 to $200,000 in startup costs. With such a wide range, you can see how important it is to find out what kind of loan you might be able to get. This will lead you in the direction of the brands you should be seriously considering. Additionally, it should also help speed up the purchase process.
When it comes to the approval process, different funding sources have different turnaround times. For example, using a ROBS plan (investing money from your retirement account into starting a business) to buy a franchise can sometimes take as little as 10 days, whereas a government-backed Small Business Administration loan can take a minimum of 60 to 90 days. Beginning the process as early as possible can prevent missed opportunities and costly delays.
It may be no surprise to hear that getting your financial information organized for the franchisors and lenders is extremely important. This will help them determine if it’s realistic for you to own a franchise. Not everyone has the same minimum requirements. Make sure to calculate your net worth and gather your credit score. Also, before you start to buy a franchise, make some projections for the business. This includes putting together a projected cash flow, income statement, and balance sheet.
Depending on factors such as minimum requirements and down payments, you may find that one lender is much more conducive to your needs than others. Make sure to do your homework on more than one lender. There are many sources for funding and financial assistance including, but not limited to, the following:
This is true whether you’re providing financial details or general information to a bank or a franchisor. Make sure to precisely calculate how much funding you’re going to need in order to buy a franchise. Moreover, don’t make mistakes such as underestimating the amount you require or over exaggerating your financial situation. You want to make sure you’re as honest and accurate as possible to get the best possible deal and avoid any complications in the future.
Best in Class Education Center is an affordable, fast-growing supplemental education franchise with nearly 50 locations all over the U.S. We help aspiring entrepreneurs get their businesses off the ground in several ways including providing connections to third party lenders and offering incentive programs. Some of our franchisees have even chosen to operate multiple profitable franchises. When you buy a franchise with Best in Class, you’re doing some good for both yourself and the community!
Do you want to consider opportunities with Best in Class? Find out more about how to own a franchise with us!