109
need a greater capital stake. And don’t forget that liquid
capital is required for those early days of franchising which
may need a bit of spare cash to cover the mortgage, rent
and bills during that initial starting out period. Calculate the
gures in a worst case scenario and make sure that you
have enough money to cover any eventualities.
If you’re worried about the nance, don’t just take any
franchise that you come across because it’s cheap. That’s P
r
a
c
t
i
c
e
not to say that cheap franchises are the wrong ones to
go for – far from it, there are some excellent value for
money franchises out there that frankly, deserve greater
recognition. The problem is, it may not suit you for a
B
E
S
T
multitude of reasons. You may have little or no experience
of the eld that the franchise is in. You may have little or
no understanding of that particular eld. And because a
franchise requires a long-term commitment, you need to
have some knowledge or even appreciation of the chosen
sector of your franchise. Don’t settle for a franchise that
may not suit you just because it’s in your price range.
A good idea is to shop around for franchise bank
loans – talk to different banks to make sure that they
know what they’re talking about and that they have the
right amount of knowledge to support your aims and
ideas. Richard Holden says that the ones who understand
franchising and your own particular business needs will
be worth considering. Banks that boast a franchise unit
are normally the safest bets. It’s also worth checking
out which ones offer the best deals and support.
Either pay a visit to your shortlist of banks in person
(which will allow you to make that initial contact) or
trawl the web for any potential lenders. Understand
the different incentives and offers, such as free
man weep). Banks regard franchising as a safer bet, since transactional banking terms, payment holidays as well
the majority of franchises actually work out. Providing that as the charges that the banks may put on you for
potential candidates come up with a good, well worked security costs and valuation fees. On the other hand,
out plan, the chances are that they’ll succeed in paying it’s also worth familiarising yourself with all
back the money. HSBC’s head of franchising, Cathryn the business jargon, legal terms and
Hayes says: “Because of the wide spectrum of industries small print that may prove to
in which franchises operate, the risk is diversi ed for the be a problem.
sector as a whole. The risk of failure is further lessened Nobody’s going to
by the support you will receive from the franchisor. It is argue that we’re on
in their interest to ensure that your business remains in shakier ground when
good shape during this economic turmoil. Most of the high it comes to nance.
street banks have specialist franchise units and therefore The economic
understand the franchise model. Applications from climate means that
potential franchisees are likely to be considered more small businesses
favourably than a conventional start up“ and, franchises,
Richard Holden, head of franchising at Lloyds TSB, says have tough
that one of the most important aspects of obtaining a times to
bank loan is to devise a strong business plan. A good plan weather
will allow you to have a clearer understanding of what is ahead. But
required (a bene t in itself), and will prove to the bank if you have
that you have a clear vision in your head of where the enough
franchised business will be heading. “The initial objective money for
of a business plan is to help you raise nance for the a “deposit”
business – however it will also help you understand what and sheer
you wish to achieve and is an essential document to willpower,
review the performance against your projections. The plan then
should demonstrate that you understand the business there’s
opportunity and unsurprisingly, a bank will only lend when a strong
it has a very good chance of being repaid.” chance that the
Unfortunately, it’s not solely up to the bank to provide banks may throw
the capital required. You’ll need to nd at least 30% of you a lifeline for your
the start up costs, so before you consider going into franchise. �
franchising, you’ll need to have enough money pugged
away – call it the equivalent of a mortgage deposit. Also • Thanks to Richard Holden for
bear in mind that less established franchise systems may additional material
www.businessfranchise.com December 2008/January 2009
BF108-109_Best Practice_Feb09 x.indd 2 7/1/09 15:38:19
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92 |
Page 93 |
Page 94 |
Page 95 |
Page 96 |
Page 97 |
Page 98 |
Page 99 |
Page 100 |
Page 101 |
Page 102 |
Page 103 |
Page 104 |
Page 105 |
Page 106 |
Page 107 |
Page 108 |
Page 109 |
Page 110 |
Page 111 |
Page 112 |
Page 113 |
Page 114 |
Page 115 |
Page 116 |
Page 117 |
Page 118 |
Page 119 |
Page 120 |
Page 121 |
Page 122 |
Page 123 |
Page 124 |
Page 125 |
Page 126 |
Page 127 |
Page 128 |
Page 129 |
Page 130 |
Page 131 |
Page 132 |
Page 133 |
Page 134