Financing Options To Buy A Franchise

Running a franchise is known to be a lucrative business move. A franchise is the license to sell a particular companies product or service. One of the most successful franchises in the world is Mc Donald’s and it’s estimated to be a $2.2 million investment.

The franchise contract documents the agreement and relationship which is often set for a particular time frame. This agreement can be renewed or allowed to dissolve depending on the franchisee’s discretion.

Buying a franchise is an expensive investment and there are many fees that need to be paid in addition like royalty and advertising. Those interested in such an investment often require financing to close the deal.

Here are some of the financing options you have to choose from:

The franchisor

Some franchisors have financing programs to help franchisees out. They waive the franchising fee to make it easier on them. This however, is more applicable to smaller franchises that are still in initial stages. Franchising helps them grow their business without having to be involved too much.

Other franchisors collaborate with financial institutions to provide loans for the purposes of buying the license. The terms of these loans are often created keeping the goodwill of the franchisor in mind. However, you should still weigh other financing opportunities before opting for this form of debt.

Bank loan

Traditional banks also provide commercial loans to finance the licensing of a franchise. Banks however, are known to have stringent rules and requirements which are difficult to meet, especially if you are new in the business. They expect clients to have good credit, valuable assets that can be used as collateral, and a handsome deposit amount. Bank charges and interest rates also add to the cost of financing. Interest rates are set depending on a client’s credit worthiness, poor credit can lead to rejection of the loan application entirely.

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Private lending

The business model of private lenders or hard money lenders, as they are often called, is to provide loans to as many people as possible. This way they can spread the risk incurred. Such services will therefore be more willing to provide loans for commercial purposes. Their loan process is also quicker so that businesses can close on lucrative deals that are time sensitive. Private lenders provide asset-based as well as other forms of financing so that more businesses have access to funds.

Global Capital Partners Fund LLC is a private money lender based in NYC that been in the business for over 3 decades now. They have worked with commercial clients, providing up to $2 billion in loans already. They provide financing for joint ventures, real estate, acquisitions, and other needs of their clients. They are known for their quick and simple loan origination to help clients close on time-sensitive projects. They offer commercial financing for real estate, permanent loan programs and other debt facilities. Call +1-800-514-7350 to speak with their agents to know more about their services.

Categories: Real Estate

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