You’ve done your research and have identified your next step. You’ve looked at all of the options and sorted through them, matching the best option with your skills and goals. But now that you’ve chosen which franchise you’re going with, have you considered how much it will cost to get started? Like with every other business foray, it costs money to get to the point where you can open your doors to customers. Just because you’ll be working with a proven model and have support doesn’t mean that you don’t need to fund yourself. It’s important to have a plan in place when it comes to franchise financing.
What to Expect Financially
While many franchises do offer some sort of financing, you’ll still have to provide a good amount of up-front investment in order to get going. Each franchise will vary in its financing options, but you should be ready to pay up to $300,000 in order to meet the franchise’s minimum initial investment. You’re paying in order to be able to use the name, marketing, and proven business model and plan, so this shouldn’t be a surprise. This is the upper end, though, and you may be required to only put up $10,000. Don’t forget, though, that this is the minimum required to buy in; you still need to have a location, obtain equipment, do initial marketing, advertise for and hire staff, and possibly more.
Planning For Your Future
After you’ve identified how much you’ll need to get up and running, you need to make a decision as to how much you can afford to bankroll yourself. Again, make sure you keep in mind the extra expenses that will happen in the first few months as far as equipment and staffing are concerned. Once you’ve done this math and made your decision about how much you’re going to contribute from your own funds, it’s time to put that all down into your business plan. If you can afford to fund yourself, this plan will help you get through the first few months. If you need additional funding, this business plan is going to be a helpful component of your application for funding.
In addition to the options offered by your franchise, there are many different types of loans available, some of which can be especially helpful when it comes to franchise financing. Keep in mind that both your franchise and any traditional lenders want you to succeed, since their success is tied to yours.