You’ve got the energy and passion to run your own business, you understand the commitment it takes to perform and want to be rewarded for all the effort you will put in. You like the sound of a couple of franchises and would love to take the next step onto the stage of self-employment. However, there is just one small snag: funding the purchase.
So, how do you solve a problem like franchise funding?
Currently, Brexit is making the banks a little more cautious about lending. They are certainly paying more attention to their risk and exposure levels and regardless of what the future holds in relation to Brexit, this is likely to continue for some time. Therefore, it is even more important than usual to present your case to the lenders properly to secure funding and gain the best rates.
For new franchises, rates of interest can vary enormously depending on numerous factors such as: the individual, the franchise opportunity and even the franchisor owners. So be prepared for questions about your background, career history, and all your personal assets and liabilities. If you are buying a re-sale franchise, then you borrow against the strength of the existing franchise.
Here, any dream won’t do! A detailed and well thought out business plan is what’s needed. If like many new franchisees, you’ve never put a business plan together before, then you will need help.
Sometimes, the franchisor can assist with business planning however, this can be seen as a conflict of interest: the franchisor wants to sell the franchise, which unethically or not, may skew the numbers. Most Franchisors prefer to remain impartial and empower a financial professional to complete the business plan in conjunction with the new franchisee. Therefore, for the best outcome all round it’s best to use an independent organisation or expert who is on your side.
With a solid business plan, an independent broker can focus on connecting franchisees to financial institutions with the aim of achieving the best rates possible. In this way, funding can usually be secured in just a few weeks.
There is no doubt that business planning requires significant time and commitment plus help from an independent third party. Therefore, before you get to the planning auditions with the bank, it is well-worth an initial business health check. At d&t we can offer the experience of our team to conduct this ‘sanity check’ and for a couple of hundred pounds we could save you many thousands of pounds in a poor investment. Our team check out the numbers and at the very least can arm you with the right questions to put to your franchisor. Having someone on your side from the outset can really help ensure you make good decisions for your future.
Sounds like music to your ears? If so, and you do decide to go-ahead we can also undertake business planning plus our fully independent Franchise Funding service, connects franchisees to much needed finance to start or grow their business. We can help you take centre stage in your own successful franchising production!
About d&t – d&t is a multi-award-winning team of chartered accountants and business advisors, working with over 100 different franchise networks across the UK. Established in the 1990s and bfa-affiliated, we now support thousands of franchisees and their businesses across a wide range of sectors, making us the UK’s market leading franchise accountants and advisors. For more information please see: https:/www.team-dt.com/
