The franchise business will contact you by means of email and/ or telephone only to the email address and phone number you have provided.
By submitting the enquiry form you are consenting to send your personal information to the selected franchise business.
You also agree to receive further newsletter email marketing from What Franchise.
What should I consider when it comes to funding my franchise?
James Thomas writes:
To gain funding for the purchase of a franchise, you will need a solid, workable and realistic business plan. This will identify how much capital you need to borrow and demonstrate to the lender how you will be able to afford to repay any loans alongside other operational costs.
Finance can come in various forms - from funding from a high street bank and directors’ start-up loans to asset finance for specific items of equipment or vehicles.
It makes a significant difference to the amount you can borrow if you are a ‘secured’ borrower (able to borrow against a property) compared with if you are an ‘unsecured’ borrower such as a tenant.
However, for those who do have equity in their property to borrow against, it is often not as much as potential franchisees think. This is because all banks write back the property to 70 per cent of its valuation, then subtract the remaining mortgage amount to give the equity value.
This means finance often needs to come from several different sources. Here, the choice of broker is important. You will need a broker that understands all aspects of your business plan, company structure and wider personal circumstances, so they can help deliver the required levels of funding needed for your project.
If you use different brokers or suppliers for different elements of the project, it is critical that you do not draw down on any one solution or commit to things like premises leases until all the required funding elements are approved. Otherwise, you will be at significant risk and may be tied into financial commitments before actually being able to start trading!
We have seen instances where franchisees have started businesses having not secured all the requisite funds, then been forced to take unfavourable loan agreements to cover the costs of escalating start-up costs. This puts your business on the back foot from day one and significantly increases the risk of failure.
To secure the appropriate funding, it is advisable to work with an independent supplier who is not limited in their approach and one who can fully assess your franchise proposition and the market to get you the funding deal you need.
An independent supplier is not beholden to any one lender and will support you and your business in the most appropriate solution to ensure the success of your franchise.
You might also be interested in
I’ve received the franchise disclosure document. What are the questions I should ask the franchisor?
Answered by John Pratt
John Pratt writes: In the UK, there is no legal requirement for a franchisor to provide any... read more
I’m a franchisee with one brand, but I’m looking to invest in another. What should I tell my current franchisor – Am I duty-bound to inform them at all?
Answered by Louise Harris
Louise harris writes: It’s good to see a franchisee looking to expand – especially when they see... read more
I’m quite close to investing in a brand. How can I be certain that the expected revenue projections they’ve supplied me with are genuine?
Answered by Shelley Nadler
Shelley Nadler writes: There are many different ways in which franchisors present revenue projections. Franchisors may illustrate... read more
Answered by Alan Wilkinson
Alan Wilkinson writes: Franchise resales may come about for a number of reasons. Often a franchisee will... read more
Exciting Franchise Opportunities
Companies to Consider
The Christmas Decorators
£150,000 per year
Yes via third parties, both bank finance and asset finance
Assists in securing third party funding
Mail Boxes Etc.
£100,000 to £120,000
In house and high street banks
Fixed sites can earn up to £16,000 per month with profit margins of 65%
Guardian Angel Carers
Get expert franchising news delivered straight to your inbox
Franchise news, advice and new opportunities delivered weekly.
Must Read Articles
Added 2 years ago | 2 min read
Added 3 hours ago | 2 min read
Added one day ago | 2 min read
Find your next business opportunity
Search 100s of UK franchises and become your own boss today.
What Franchise Newsletter
Keep up to date with all the industry news