Franchise Financing: 6 Options to Evaluate

Franchise ownership enables you to enjoy the entrepreneurial experience, but with a special edge. That’s because when opening a franchise storefront, the parent company/franchisor licenses you the ability to use an established business name, product, and brand. Franchise owners enjoy working with an established company with a proven business model.

However, the challenge of finding financing remains. Funding a franchise, like funding any business, is one of the biggest challenges new business owners face. Luckily, franchise ownership comes with some unique financing options, such as special franchisor discounts on fees and online financiers who cater specifically to franchises.

Topics of Discussion

• Traditional Bank Loans
• Online Lending Options
• Asset Financing
• Angel Investors
• Crowdfunding
• Work Directly with the Franchisor

1. Banks and credit unions are the first-stop source of financing for most businesses, including franchises. Most lenders are more apt to finance franchises than other new businesses because they are an extension of an established brand. However, traditional banks often have stringent underwriting standards and lending policies that will require a thorough application process. Which might lead you to seek out online lenders.

2. Big banks prefer to fund individuals and companies that are so successful they don’t really need financing. This can be discouraging for millennials and first-time entrepreneurs who are ready to take on the work but don’t have the history to back it up. This is where online and peer-to-peer lending companies can help. The online lending space offers would-be franchise owners streamlined application processing, greater approval chances, and faster money-in-the-bank funding.

3. Traditional loans and their terms are not for everyone. Asset financing is a great alternative because it enables franchise owners to free up their capital to invest in their franchise assets. This is best utilized in scenarios in which business equipment is needed but cash flow is an issue, such as when a franchise is starting up. Asset financing secures loans based on the assets you offer up. This offers owners financial security and flexibility.

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Disclaimer: This information is not intended as an offer to sell, or the solicitation of an offer to buy, a franchise. It is for information purposes only. Currently, the following states regulate the offer and sale of franchises: California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Oregon, Rhode Island, South Dakota, Virginia, Washington, and Wisconsin. If you are a resident of or want to locate a franchise in one of these states, we will not offer you a franchise unless and until we have complied with applicable pre-sale registration and disclosure requirements in your state. Franchise offerings are made by Franchise Disclosure Document only.