|
Buying a new or resale franchise in Canada? Let's try and show you how you can in effect ' pull the trigger ' successfully on franchise financing those costs. We read recently that a franchisee/ franchisor relationship is not unlike a marriage between you and the franchise firm that you have selected as your future partner for hopefully... a long time! Although our focus is on financing it's safe to say that what we refer to as the ' soft issues ' of success in franchising are as exceptionally critical. Typical attributes of a successful franchisee are of course being sales or people oriented, driven to succeed, and are of course committed to working hard and growing their business. Sounds easy, probably isn't we think! When it comes to financing you need to be in a position to have thoroughly investigated the financial aspects of the business. That might have included the costs of buying an existing franchise. It might be a company or ' corporate ' store currently held by your franchisor, or simply another franchisee, just like you, who wants to sell their business. Do we even have to mention you probably want to thoroughly investigate why that franchisee is selling, as that decision might be critical to your success! Various franchisee associations and industry associations exist in Canada, and if you have ever wondered about ' picking someone's brain ' we'd say that time is now when it comes to exploring the information around the industry itself, its regulation, etc. We would also point out that much of the legislation in the industry seems to significantly favor the franchisee rights, which, if you're a franchisee is a good thing. If you're a franchisor... well... that's a different story we guess!
Franchise financing costs vary in Canada. You can purchase a small service oriented franchise, or, as many do participate in the Canadian QSR, FSR and Full service restaurant industry. (Quick service, fast service, full service).
In Canada the majority of franchises are financed with a co - signer, in effect the government of Canada! We're hoping these days that they are good for it!! That's because the government small business loan program, typically called the SBL / BIL or CSBF program finances thousands of franchises. As we noted in our introduction you can successfully use the program to finance both a new or resale franchise. In the case of buying a resale franchise you want to ensure that you have full financial disclosure from the current owner. That would of course include proper financial statements which would allow you to determine a valuation or proper pricing. This is a great time to enlist the help of an experienced business financing advisor, a lawyer, accountant, banker, etc - simply speaking: Someone to help you make the right decision. In the case of a resale franchise you need to have a proper valuation done on any hard assets in the business. This can easily be accomplished by using a proper appraiser that can give you a sense of the actual value of the assets you're buying. In the case of purchasing a resale franchise your transaction must be completed as an asset sale, not a share sale, which is typically difficult to finance if the seller insists on a ' share sale ' of the franchise. Proper equity from yourself, plus a solid business plan and cash flows, plus some miscellaneous related busines financing application info will allow you to successfully complete franchise financing in Canada. In certain cases, with certain franchisors, you might qualify for financing from a highly specialized franchise finance firm. General financial criteria remain the same when it comes to financing from a non-regulated commercial financing firm such as a leasing company, etc. At the end of the day successfully ' pulling the trigger' on financing costs for your new business come down to homework by yourself, working with a solid advisor or advisors, and presenting a strong business plan highlighting your experience and business growth potential. Speak to a trusted, credible and experienced Canadian business financing advisor if you are interested in pursuing financing for a new or resale franchise in the Canadian market. Stan Prokop - founder of 7 Park Avenue Financial - http://www.7parkavenuefinancial.com Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing .Info re: Canadian business financing & contact details : http://www.7parkavenuefinancial.com/franchise_financing_new_costs_buying_resale.html
Related Articles -
Franchise financing, new, costs, buying, resale,
| 
