Funding Your Franchise
FranTrends: In an economic cycle like we are in, what is your advice to those potential franchisees looking to find funding for a franchise?
Andy Louis-Charles (founder of the North Carolina based Landist Capital Management): The most reliable source of financing for a franchisee is usually the parent franchisor. They need to move franchises, so they are usually willing to help competent owners get additional territories up and running. If the buyer is brand new to the system, they may be a little more hesitant to extend financing. In those cases, potential franchisees may want to find other owners in that franchise system to partner with as the parent franchisor will be much more willing to fund existing owners that have shown success in the system.
Since franchises tend to have a higher success rate than the average business started from scratch, there tends to be a fair amount of private lending sources… especially those that originate SBA guaranteed loans (i.e. even UPS provides such financing: http://capital.ups.com/solutions/sbl_franchise.html)
FranTrends: What tips can you offer to those who are running into walls getting financing for a franchise? Read on.
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