Financing a Franchise Advice Needed

[muckell]

Hello there,

I am in the process of setting up/taking on (however you may say it) a franchise, and the start-up costs are around 85k, myself and my business partner are putting into the business 50k capital and are looking to loan the 35k remaining from the bank, we have a meeting arranged with Natwest as they seem have a good frachise section, but can anyone advise on anyother good banks/sources of finance, also any ideas on interest % paid on that type of loan to capital ratio

 

[Alpha]

Most of the high street banks will have decent sections on Franchises. The main thing is really to see at least two and preferably more.

Make sure you have a comprehensive business plan with what if scenarios to make sure they know you have put a lot of time and effort into the business plan.

see what they have to offer and at the end of the conversation thank them for their time and then mention that you have a couple of others to see and you will evaluate them after talking to each one and will get back to them by.....

Often manages to focus their minds on offering you a good deal and they may then revise it ( An HSBC manager I was negotiating with kept dragging his feet on offering a loan until after our last meeting I lead him to ask if they were talking to anyone else. When I then mentioned that we were going to talk to Barclays in the afternoon he telephoned as soon as he got back to the office with a concrete proposal and offered a pretty good rate.

the proportion that you are putting in as capital is pretty good so on the face of it there should be no problem in getting the loan you require.

 

[d-eye]

don't do it!
keep your money, use the idea & brand it for yourself. Unless the franchise needs a national network to succeed then you will be better off doing it yourself locally. If it does need a network then you've got even less chance of succeeding! You are signing your life away to be treated like a slave. Don't fall for the hype!!!
Ian

 

[Jayne]

don't do it!
keep your money, use the idea & brand it for yourself. Unless the franchise needs a national network to succeed then you will be better off doing it yourself locally. If it does need a network then you've got even less chance of succeeding! You are signing your life away to be treated like a slave. Don't fall for the hype!!!
Ian

I agree, loads of good businesses for sale, put your own stamp on one. 50k will get you a loan for about 200k, if you find a business with a good turnover to cover the loan etc, no bank will say no, unless you have had previous debt problems.

Jayne

 

[Rob Holmes]

I disagree - franchises are known to be more successful because they have a proven format and are time-tested for starters.

The list of major businesses around the UK that are franchises is immense - people just don't realise they are franchises.

Rob

 

[Jayne]

I disagree - franchises are known to be more successful because they have a proven format and are time-tested for starters.

The list of major businesses around the UK that are franchises is immense - people just don't realise they are franchises.

Rob

Guess you have a point But I wouldn't want anyone telling me what to do, I like to be the organ grinder not the monkey :lol: :lol:

Jayne

 

[d-eye]

Yes!
The "franchises" are ver good, very succesful & very glossy, however the "franchisee" is invariably not. These set-ups are all designed to make money for the "franchisor" with minimal risk. All the risk is to the franchisee. It is also a legal way round the "legals" i.e. minimum wage, H & S, W.T.D. etc. Again, all resposibility fot these as well as the finance side is with the franchisee.

ian

 

[acf]

Yes!
The "franchises" are ver good, very succesful & very glossy, however the "franchisee" is invariably not. These set-ups are all designed to make money for the "franchisor" with minimal risk. All the risk is to the franchisee. It is also a legal way round the "legals" i.e. minimum wage, H & S, W.T.D. etc. Again, all resposibility fot these as well as the finance side is with the franchisee.

I totally agree with it. I had a nightmare of being a franchisee where I paid the franchise fee but ended up with the closing down the business just after six months. The so-called proven and tested business system did not work and the franchisor contrary to his well-publicised promise did not provide any 'client' who would be reportedly waiting for me at the start of the business. Reading of articles on the ratio of success of franchised businesses was a deciding force to opt for a franchised business rather than a totally new business. A number of my fellow franchisees had also no other option but to close down their businesses within 6-9 months after suffering heavy financial losses. So think twice before entering into a franchise business.

 

[Rob]

ACF's experience shows that just because the company says there is business waiting in the wings, you should not ignore one of the fundamental issues when starting up in business - is there a market for my product?

Just because someone else says there is it shouldn't mean you don't do some research yourself. Franchises are good, if they are in the right market. Systems are proven and presumably have a good track record. Ask to speak to other franchisees and question their experience.

A franchise may appear to be a ready made business but it doesn't mean the fundamentals should be thrown out of the window.