How to establish an effective franchisee network
Expanding your business through franchising requires...
Being stuck in a job that you don't enjoy makes life dismal, particularly if you are passionate about running your own business but need some help getting started on your journey to entrepreneurship. Luckily, there are many ways into franchising that don't require significant amounts of capital.
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Top potential financing options
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1. Franchisor financing
If you can prove to a franchisor that you are committed to growing their brand, possess the skills and experience to succeed in business and have enough money behind you to call on professionals as needed to keep you on the right trajectory, they may be willing to loan you the money needed to establish a branch of their business.
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2. Canada Small Business Financing Program
If you meet the eligibility requirements of the program, you may be able to borrow the money you need to join a franchise, with lower interest rates than is typical when borrowing from mainstream lending institutions.
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3. Partnerships
If you are willing to share the costs and risks of entering into business with another person, partnering with a trusted individual can help you achieve your business ambitions. Make sure to select someone whose values and aspirations align with your own and who is willing to invest the capital needed. Be sure to get a legal agreement drawn up to protect both of your rights and interests.
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4. Mainstream lending institutions
Securing a loan from a mainstream lending institution will require that you have a solid credit history, sufficient collateral and a convincing business plan. If you are successful, however, they will lend you the money that you need to establish your business.
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Select the right business
Not only must you find a way to obtain the capital necessary to get into franchising, but you must also be realistic when looking for a franchise to join. There is little point in applying to a global organization with significant upfront fees and royalties, so seek out the businesses operating in niche, specialty areas.
Find a business that will fit into your life, whose products and services you are familiar with, and whose goals and values align with your own. Consider how much time you can invest in a business and whether you plan for it to be your only source of income or you will operate it as a side hustle.
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A word of warning
Though there are many routes into franchising, even for those without capital, you should be prepared for the reality that you may not initially turn a profit and might need to rely on savings or employment to keep you afloat while you establish your business.
Franchising is less risky than going into business by yourself, but it is not a guaranteed income. If you have financial worries or cannot afford to weather a lean period, you should very carefully consider whether borrowing money to join a franchise is the right choice for you.
Discuss your choice with family and trusted advisors, and if necessary, seek advice from a financial professional. This will help you to achieve clarity of mind and make sound business decisions.
