Canadian Franchise Financing Made In Canada Solutions!
Canadian franchise financing requires solutions that are not necessarily part of mainstream business financing
. As in all types of business financing we urge clients to consider working with an expert who is credible and experienced in the Canadian franchise financing environment .There are a solid handful of franchise financing alternatives in Canada . Franchising is growing increasingly popular, and the industry as a whole is a key part of Canada's relatively strong economy after the difficult challenges of 2008-2009.
Franchise financing in Canada consists of the same two elements that exist in any business financing debt, and equity . Our work with clients has found that it is more beneficial in financing a franchise for your equity portion of your deal to carry some of the major soft costs . In general, and this is news to many new franchisees, soft costs such as franchise fees, pre paid rents, etc cannot be financing .
As we have stated , your financing is completed via two areas your equity that you put into the business, and what you borrow . You naturally would have a much stronger chance of success if you put up all the funds yourself, as your franchise would not be carrying any debt but the reality is of course that is not generally possible .
In discussing franchise financing with clients we point out that financing has to consist of two different mind sets the financing you need to get the business purchased and going, and then, equally as important , the ongoing working capital needs . Many franchises are ' cash businesses ' ( example restaurants ) that require little or no investment in receivalble and inventory . Alternatively your franchise might have a non cash business focus on you need carefull planning on the level of financing you need for a/r and inventory, etc .
Franchises in Canada are financed in 5 ways in Canada . It is extremely important you are aware of those five sources Naturally the 6th source , unmentioned, is yourself, as you are of course required to make some level of personal investment also .
The Golden 5 ! Franchising in Canada is financed by one major international finance firm , as well as the Canadian banks, who have special departments set up for this type of financing . It is incredibly important to ensure you are dealing with the right group at these two institutions , otherwise you will waste significant time and erase some of the credibility around your financing request .
Our firm supplements the above two sources of financing with leasing for various assets, and in some cases unsecured working capital loans . The final component is the franchisor itself, or the franchisee from whom you are buying an existing franchise . While many franchisees who are selling to your will consider offing vendor takeback financing in general this is tenuous additionally franchisors themselves are in the business of selling you a franchise , not lending you funds !
In summary, franchise financing in Canada is a focused and specialized niche lending . It is accomplished through a combo of traditional and somewhat non traditional sources . Determine what financing you need to acquire the business, as well as ongoing working capital needs . The words ' franchise financing expert ' should become a top priority , as an expert will help you cobble together your total financing solution that meets your personal needs .
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