Getting involved in a franchise can clearly be a great way to start your own business. You benefit from an established company identity, mass marketing, customer goodwill, and a proven method of distribution. However, opening your own franchise is not cheap. You're going to need money and quite a bit of it to get your dream started.
The good news is that there are lots of ways to finance your franchise. Let's look at some of those ideas:Personal Resources - Look around you, and you'll probably be able to spot some potential personal resources that could help you fund your franchise. Think about your friends and family members, for example. Wouldn't some of them be interested in investing in your dream? Or what about your home equity? A home equity loan or line of credit could provide the extra financing you need.
Retirement Accounts & Severance Packages - Maybe you have a nice sum of money tucked away in a retirement account that could cover some of the costs of financing your franchise, but you can't touch it because of the penalties. However, there is a way for you to access your retirement fund in order to finance your franchise without ending up paying those exorbitant penalties.
Franchisor Financing - Some franchisors will either provide financing themselves or will hook you up with lenders that are familiar with the franchise so you can more easily get approved for financing.
Small Business Administration (SBA) - One of the most overlooked avenues for financing assistance is the SBA. However, they do offer several programs that make it easier for first-time small business owners to get the loans they need to start their businesses.
SBA Franchise Financing - Besides offering special programs to help business owners get bank loans, the SBA also helps would-be franchisees with a special program meant to streamline their loan approval process.
Finance Companies - One of the fastest growing sources for small business financing, finance companies are in the business of making loans. They provide a lot of benefits and programs you won't find at traditional lenders and, usually, are more willing to grant loan approval.
Banks - Still the first place you're like to think of for financing your business venture, banks are definitely an option that you have to keep on the table. Many banks offer special loan programs for small businesses. Be careful though - not all banks will give loans to start franchises.
As you can see, there are a number of resources worth considering if you are serious about starting a franchise. Even if your credit isn't stellar and you don't have much collateral, there are options on that list above which will help you make your franchise dream a reality.