Going it a loan?

Franchised businesses are becoming more popular and your options for funding are many. But finding the right option for you can be tough

Going it a loan?

They say it makes the world go round – whoever ‘they’ are. The truth is, if you’re serious about making a business work, you need to think about the moola, clams, cheddar, dough, Benjamins and deng. In other words, the money. The first question anyone looking to buy their franchise should ask is: how am I going to fund this thing? And there are a plethora of options out there.

“You’re going to need to work out how much it’s all going to cost before deciding on one path or another,” says Mark Scott, director of franchising for NatWest. According to this year’s NatWest/bfa Survey, the average set up costs for a franchise are around £50,000 to £60,000, though in reality this can range from a few thousand to millions. So which funding option is best for you?

Family matters

Some franchisors actually provide finance to their franchisees but if you aren’t one of the lucky few, the immediately obvious place to look would be your own finance – whether that’s savings, investments or money from a recent redundancy. Sadly, for a lot of people the pocket money they’ve been saving since they were 12 isn’t going to be enough. “Alternatively you could turn to friends or family who are likely to support your vision,” says Scott.

This option has three major benefits: you have an extra pair of eyes on board to assess your investment; interest rates do not normally apply when borrowing from those you know; and, in some circumstances, the money may be offered as a gift. Lucky for some.

On the flipside, with family and friends there is always the danger they may ask for it back at some point when you are unable to, therefore affecting your relationship with them, Scott warns. That is why it is essential that clear conditions are set before accepting any money.


Ryan McChrystal
Ryan McChrystal