As someone who has helped many achieve their goals of business ownership through franchising—and as someone who has seen firsthand the power that business ownership affords them—I find it so rewarding to guide candidates through the process of selecting and starting a franchise.
This is not a task I take lightly. I’m always searching for additional bits of information to pass along as I help new franchise candidates pave the way for a future that aligns with their career goals.
Many candidates have questions about the finances of franchising. Franchise owners come from all sorts of backgrounds with a wide range of experiences, and financing often looks different based on their backgrounds.
How should one go about financing a franchise? What details would be helpful to know? Can you even get financing in this financial climate? There are a lot of questions out there. Here’s what I’m seeing—and here’s what I know to be true.
What Does It Take To Finance a Franchise?
Recently, I’ve noticed a few common misconceptions about how to finance a franchise. Just in the past few weeks, I’ve had three candidates approach me with very different thoughts about the process of funding a franchise.
- One candidate used to work in the supply chain industry. After all of the pandemic-related upheaval of the past few years, she’s looking for something new. Before we spoke, she was under the impression that in our current economy, banks are not currently lending money to new franchise owners—or small businesses at all, for that matter. This candidate was concerned that she needed to raise 100% of the cash necessary for her new business venture if she wanted to take the next step.
- Another candidate came from the insurance industry. He heard that banks are currently ready and willing to lend money to business owners who are opening restaurants—as long as they’re franchises. His friend had just opened his own franchise and mentioned how easy it was to secure financing for their new franchise. The caveat? This friend already owned ten other franchise locations; it’s no wonder their experience was simple! Someone entering the field for the first time may not have the same connections, and their experience may be different.
- A third candidate was brand new to the world of franchising and came with no preconceived notions about the process of financing a business. She wanted to learn as much as she could about franchise ownership, including how much it costs to start a business, the parameters she would need to follow, and all of the aspects of financing a franchise.
There are many beliefs out there about what goes into financing a franchise—and not all of them are true. Some of these misconceptions may be what keeps someone from entering the world of franchise ownership. It’s my goal to alleviate some of these misunderstandings and make the process of starting a franchise a smooth one.
Here’s the truth: Many business owners secure loans to start their business. In fact, somewhere around 19 percent of small business owners of all kinds apply for a bank loan to start their business, and 37 percent of small business owners get financing of some kind.
There are a lot of questions out there about how to get the ball rolling when it comes to opening a franchise. Franchise candidates need a reliable, experienced guide to navigate the ins and outs of financing.
Introducing: Monthly Financing Webinars
The lending environment changes frequently, often following shifts in the economy—but this isn’t always common knowledge. It is, however, information that may be very helpful to franchise candidates who are just getting started. The financial lending industry shifted vastly from 2018 to 2020, and since the onset of the pandemic to mid-2022, there have been many more changes to the financing landscape. This may affect the approach a candidate takes to secure the financing they need to enter the world of business ownership.
As a franchise expert, I’ve been lucky enough to establish relationships with the very best in the franchise finance field; professionals who are well-versed in the world of lending. These industry gurus understand what is happening now in the world of small business franchising—and they also have a handle on what’s coming next. They’re well-poised to offer valuable insights.
So, what should candidates know about financing their own franchise? My advice is to start with the facts as it relates to your situation. And to seek out the experts and hear what they have to say.
Want to learn more about how to finance your franchise dreams? Here is a monthly webinar hosted by the pros at Franchise Finance. It’s a great place to explore your options and learn more about financing a start-up before you begin a full investigation.
Once you hear what they have to say, let’s talk. I’m proud to partner with Franchise Finance—it gives me additional tools to help candidates find the right path toward franchise ownership for them. Don’t let the fear of financing stand in the way of your future. Let’s connect and discuss finding the right options for you.
David Weaver is the Founder of Franchise Your Freedom and a senior consultant with FranChoice, the premier national network of franchise consultants. David helps people all over the country find the right franchise fit by sharing his personal experience and philosophy on how to select the right brand. He shares proven strategies and over a decade of experience growing franchise companies for himself with those that are doing it for the first time. You can learn more about David at FranchiseYourFreedom.