• Any necessary staffing costs (average) • Any other element for the initial launch of the business
• Vat • Working capital
Typical total start-up cost Each franchisee operation in the same network may have slightly different costs as mentioned previously, so ask for a ballpark, typical, all-inclusive start-up cost for a franchisee in the network. Remember, though, that this is an indicator, and components such as vehicles, staffing or property can vary and mean that the actual cost of a specific franchise opportunity is noticeably more or less.
Covering the costs You may be able to cover the total start-
up fee of a franchise purely from your own savings but in many cases a loan will make up part of the finance. Franchising has stood the test of lending well in comparison to other sectors during the downturn; banks favour the franchise model, which offers proven systems and operations, and proven trading data of what is possible.
They particularly like bfa member franchises because they know the business model has been scrutinised by the industry’s trade association as part of its membership accreditation process. The bfa has high street banks within its membership, contact details of which can be found on the bfa website, www.
thebfa.org. It’s important to always ask for the franchise department, whose staff understand the niche model perfectly. As a general rule, banks will lend up
to 70 per cent of the start-up fee for an established franchise, decreasing for those brands newer to the sector.
Minimum personal investment Some franchises will expect you to hold, and prove you hold, a minimum percentage (rather than just a minimum set amount) of the total start-up cost in liquid capital. This is typically, where set, 30 per cent of the total average cost, but can be significantly higher or lower.
Fees can be confusing but – as with most aspects of selecting the right franchise for you – careful and thorough research will steer you in the right direction. For more information and advice on
researching franchise opportunities, see the bfa’s online guide to joining a franchise. With substantial hard work, you might be able to start watching the money come in! n
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