Franchise Financing – Loan Approvals In Canada

Franchise financing approval in Canada is a key aspect of the challenge entrepreneurs to buy and build a business. Canadian business people buy franchises because they want to profit and be successful on an already proven business model,. Of course, we assume that they have found the right franchise!

What mistakes can happen in franchise financing, as it is about buying a new or existing franchise? Of course, solid planning and careful preparation of a business plan increases your chances of success.

Whether a business is a franchise business or not foundation for a successful financing strategy is important for long term success. Business owners, banks, other lenders and financial analysts always look at the relationship between debt and equity - in just one language, which means how much you put in the shop and how much you borrow. If you borrow too much, you are considered 'over leveraged. Therefore, in the course of buying your franchise, you must be ready to make a personal investment in the company too - it's a given - it may not all be OPM who is and an acronym for 'Other People's Money. "

Then of course when we met with customers, they always ask "how much should I put into it? The answer is as follows - many franchisors will actually insist on a certain amount of money put down, because based on their actual experiences with their own sites and other franchisees to eventually develop formulas, what is an optimal investment of yourself.

Also remember that if you, as an example, the shopping, says a large unit of a restaurant chain that transaction may be $ 1 million range. Let's say you put 25% down from 250k. Another franchisee would be to buy a service oriented company that has not and can not require fixed assets such as rent, equipment, etc. If the operational cost 100k to buy a 25% payout is obviously only 25k, far less than the 250k other franchisee had to kill in absolute dollars. Then our point is simply that if the purchase price of your franchise is asset-intensive and have a higher dollar value, you naturally assume that a large absolute amount of U.S. dollar funding is required. That it probably is clearly the appeal to many service-based franchises that do not require assets.

So how are asset based financing franchises in Canada. There is, in our view a large amount DIS information about franchise financing in Canada - why new and potential franchisees is encouraging to talk with a trusted and credible franchise finance expert. It is simply because you will know your options and strategies much better. It is certainly not bad if you can to talk to other franchisees in the franchise system you are looking at purchasing.

In some respects there is an advantage to buying an existing franchise from the current franchisee in the system you are viewing. Our observation is that the units come with a higher price for the simple reason that they are convinced already has the sales, profits, and cash flows that you can analyze with your franchise financing expert to determine the overall profitability of the company.

We have worked with a number of potential franchisees who actually are comfortable in buying a franchise that does not do so well because the strong feeling that they can turn it around. So there is actually buying a company that is confident, but temporarily distressed in some way, usually with regard to issues such as poor sales revenue, etc.

Franchise in Canada are financed mainly by a major government program that are in existence - we have found that using this program and to compliment that funding with a working capital loan and leasing and equipment financing (if applicable) helps to ensure the overall franchise financing success.

In other words, ultimately you as a business owner to become familiar with what you buy - but you should also take solace in knowing that the franchise finance is available in Canada, and just to be tailored to the type of business you buy its size and asset requirements, and utilization of proven and available financing methods such as the government CSBF program we refer to.

Inspect your apartment, plan financing carefully do the financing and your chances of success rise dramatically.