Every business requires funding in order to get started, and franchisees face the same basic challenge. However, the world of restaurant franchising comes with a few convenient differences that allow would-be entrepreneurs to get up and running at a much faster and more efficient rate.
Affording a restaurant franchise comes down to planning and available funding, and the two often work together to achieve the same result. If you’re ready to take the plunge into the world of franchising, we encourage you to read on and learn a few handy tips that will make your startup process that much easier.
TAKING ADVANTAGE OF REGULAR LOANS
For many entrepreneurs, this is the standard go-to solution when securing funding to start a franchise location. Regular loans come in many different flavors, all of which depend on what you need to start your particular franchise. You’ll have to compare the amount of money you already have to the amount you need to borrow in order to come up with the proper amount. The key is to never borrow more than you need to start your franchise location, or you could pay heavily through unnecessary interest fees.
When opting for regular loans, make sure to read all the fine print, shop around, and compare things like terms, interest rates, special conditions and other variables that can affect you both short and long-term. It’s also a good idea to try and calculate your repayment plan, so that you can rid yourself of debt and start focusing more attention on the actual business.
PARTNERING UP
Many entrepreneurs may wish to lighten the risk factor by choosing a partner to go into business with. This can be a tremendous weight lifted off the shoulders, and an opportunity for two heads to make a better success of the franchise, as opposed to just one. When partnering up, every detail matters, so make sure your contracts are drafted to cover all plausible scenarios, including exit strategies and percentage of ownership.
Another form of partnering is a joint loan, which leverages the credit rating of your spouse or partner to secure funding. Those who wish to go down this road should be careful, as financial tumbles can prove detrimental to a marriage or relationship. Make sure both of you understand the risks going in, and have each other’s backs. If there’s any doubt remaining, don’t pursue this avenue.
GET AN EQUIPMENT LOAN
Equipment loans are handy when it comes to securing funding for things that make a restaurant franchise run, such as accounting computers, cookware and other items. Part of making a franchise location run properly involves adhering to the franchisor’s established operational guidelines. There’s no going solo in this business, and franchisees need to understand that the franchisor has expectations. Equipment loans are quite handy when starting a restaurant franchise, as it’s very easy to narrow down the cost required for equipment. With a solid forecast presented in an upfront manner, lenders should be able to gauge your financial needs, while determining if you are a risk or not.
TALK TO YOUR FRANCHISOR
It’s also a good idea to talk directly to the franchisor to see if they have particular options in place that can allow you to finance your new location at a better rate. Since franchisors invest in each new location, they also have an interest in making sure the business is a success, which adds to their revenue stream. Franchisors may have access to their own in-house financing options that can be of particular benefit to would-be franchisees.
Similarly, franchisors may simply have a better understanding of the business as a whole, and can point franchisees in the right direction when it comes to securing funding. Since franchising is a partnership between the brand and its individual franchisees, this avenue is a win/win for both.
CONCLUSION
There are numerous ways to secure funding to start your new franchise location, and that’s good news for entrepreneurs who want to hit the ground running, and start turning a profit in the least amount of time.
If you’re ready to jump into the restaurant franchising business, St. Louis Bar & Grill wants to hear from you. We’re expanding into new territories including the United States, and our explosive growth is a testament to our tried-and-tested franchising model. We’ll talk to you about the best methods for securing funding, and starting the next chapter of your entrepreneurial career.
