Franchise Ownership: Financing Your Business for Success
Franchise ownership is one of the most popular entrepreneurial ventures someone can choose. Franchises are about as turn-key as one can find in a business model. Training, processes, and logistics are all built into the business, and franchise ownership gives people the ability to scale the business to ensure a healthy cash flow. Franchise ownership even offers opportunities to expand territory to create a veritable empire for years to come. However, before we get too far ahead of ourselves there are few financial considerations that need to be in place before the franchise officially launches.
Franchise Ownership Requires Real Estate
Almost every franchise that isn’t run out of a home office needs a physical base of operations. Whether that franchise space is leased or owned is usually stated by the franchisor. Due to the need for build-outs and customization, many franchises either modify existing structures or build new establishments from the ground up. But whether through leasing, purchasing or construction, franchise owners need adequate commercial real estate financing for property acquisitions and renovations.
Every franchise uses equipment from computers and security systems to vehicles cash registers, industrial appliances and more. Certain franchises require very specific equipment to be purchased from vendors. Others allow franchise owners to lease equipment, even if it is proprietary. Purchasing equipment can require a hefty cash outlay, and some franchisors will assist with that cost, but the balance needs to be paid by the franchise owner. Fortunately, there are special franchise financing programs specifically designed for purchasing and leasing equipment, so an establishment is fully operational for the grand opening.
Working Capital for Franchises
Property financing. Equipment financing. Franchise ownership takes a bit of preparation, but there is still one more piece – working capital. Franchisors may provide a lot of built-in things which would otherwise be out-of-pocket expenses for other entrepreneurs, but having adequate working capital can help to cover incidental expenses or unexpected costs. Some franchises go the route of SBA loans or conventional small business loans which can be tailored or scaled to the needs of individual franchises.
At Wise Commercial Capital, we specialize in franchise financing to ensure you are ready for success on day one. From commercial real estate to equipment and working capital, our team will work with you directly to understand what type of franchise you are launching and your capital needs. To get started, contact our offices today.