Franchising is a popular business model in the United States with over 750,000 franchise establishments in operation across more than 3,000 different franchised concepts. For entrepreneurs, franchising offers many benefits compared to starting a business from scratch. For example, franchised concepts have a developed business model with some amount of established awareness, corporate office support, training, and other features. Yet, there are still challenges faced in buying a franchise including getting franchise financing.

Challenges of Buying a Franchise

Some of the challenges faced by someone who is eager to buy a franchise include some significant costs. Startup costs include a franchise fee, potential real estate and build-out costs, expenses for supplies, inventory and daily operations, personnel costs, and marketing costs. For most new owners, these costs require franchise financing.

Other challenges include the learning curve present for every new enterprise as well as dealing with (and having patience for) the ups and downs of business.

And there are some risks including having insufficient capital and choosing the wrong location.

Franchise Financing Options

There are many good ways to get the franchise financing that is needed to start your franchise:

Many franchisors will offer financial assistance, either from the corporation itself or from partnering financial sources.
Commercial bank loans are the traditional second “go-to” after consulting with the franchisor for their assistance.
SBA loans are an excellent avenue for a new franchise owner. These loans are specifically focused on small businesses. They are available from banks and other lenders and guaranteed by the SBA, and they offer favorable interest rates and payment terms.
Alternative lenders offer good ways to get the franchise financing that is needed.

Getting approved for franchise financing requires a good business plan, a good credit score, and may also require a down payment and/or the pledge of collateral.

Seek Expert Financial Assistance

Contact Overhead Capital Ltd. for financial solutions to address your franchise purchase and ongoing capital needs. Our experienced financial professionals can help you secure funding to meet your business’s financial needs and goals.