Financing the expansion will be easier with a well-designed franchise system
With our help we ensure, that your new franchise system is presented to and approved by the appropriate financial channels.
Financing the expansion results in regularly difficulties and may be a factor that slows or impedes the growth. There are often two financing requirements to be covered: the franchisee’s financing of the growth and the financing of the franchisee’s investment.
Franchisees often need liquidity to enable a growth of new units. The need for financing this liquidity depends on how the investment in the new units will be shared between franchisor and franchisee.
Franchisees need to get the assets that need to be acquired financed, and often training and development is needed prior to grand opening, which often results in a period of time with no income.
In both cases we have experience in working with financial institutions. It is very important to work with a financial institution with knowledge of franchising, as they will have experience with the issues that can arise during the franchise driven growth. We can assist you in getting your franchise concept approved. This means that we will not only review the budget, but also the agreement and the critical factors associated with the franchise concept. This will give the financial institution a thorough knowledge of the concept, so they instead can concentrate on evaluating the new franchisee on the basis of the credit assessment.
We will furthermore help establish standards that can assist future franchisees during the preparation of a business plan and a business budget. Both of these elements are required, when the financial institute evaluates the new franchisee. As franchisors, it is in our interest that the financial institute is thorough in the credit assessment of a partner to be, as these institutes often are more skilled at judging their financial background and abilities, than we are.