It is generally recognised that the purchase of a franchise provides a measure of comfort to individuals seeking to enter the world of business for the first time, due to the track record of the franchisor who has normally made a success of the business and can provide a business model to follow, and the existence of other franchisees who can supply details of their own experiences thus short circuiting many of the issues faced by new businesses. However, this expertise and support is not free, and in additional to initial spending on premises, plant and equipment etc. the prospective franchisee must also pay an up-front fee to the franchisor. The overall package can the therefore be significant, with franchisors looking to receive substantial sums for the purchase of a franchise territory plus ongoing revenues, often based on turnover, for ongoing support. However, the fact that the franchisee is buying into an established business concept is also of comfort to the banks, and they are likely to be prepared to lend up to 70% of the total costs required to establish the new franchise business.
Despite the support of the franchisor, from time to time a franchisee will fail, and look to sell their business and territory. If you are purchasing such a business loan finance will also be available to you, although the percentage offered may be slightly reduced due to natural caution following the initial failure. In such circumstances a solid business plan is even more essential than normal, and will help in raising the percentage finance offered.
NFS can put together a complete franchise purchase package, comprising:
- A loan to cover the initial purchase plus initial working capital requirements. Enterprise Finance Guarantee Scheme if required and available.
- Asset finance to cover initial plant/equipment, fixtures/fittings, and office equipment.
- Vehicle finance, if required.
- Invoice factoring, if required, to free funds as soon as possible for further use in the business.
This package is also available to existing franchisees wishing to expand or purchase another franchise.