More than 90% of franchise owners in the UK run their business at a profit confirms the annual national survey carried out by the British Franchise Association, so its easy to see why the banks have confidence in new franchise businesses.
In addition, the banks are making much use of the governments Enterprise Finance Guarantee scheme. The Enterprise Finance Guarantee scheme was created to grant government underwriting of small business development funding up to ?1,000,000.
When seeking finance to fund a franchise business you should have prepared a well thought out and well written plan for the development of your franchise business. Each plan for franchise development that you submit to the finance lenders for funding for your business must contain the following points as a minimum:
1. Careful research of the franchise that you have chosen
2. Clear understanding and concordance with the franchise contract
3. In-depth local market analysis by the prospective or current local franchise owner
4. Local competitor research and the affect on turnover and profit projections
5. Declaration of your liquid investment capital
6. Personal assets that could be used as security against the loan
7. No issues showing on your credit history including CCJ’s
8. A commitment to follow the system proven by the franchisor
9. Commitment of support from your family in your new franchise business
10. The choice of franchise is known to be well run and effective from its own independent research
In view of the above the lender will come to a decision on the level of funding it will provide to the new business.
To assist with your planning, take time to look at the business section websites of some of the popular high street banks as many will supply free business planning software to assist in building your business development plan logically, prompting you for the important information that the bank will need to understand your plan and therefore decide if they can lend you what you require.
Nick Strong is MD of Select Your Franchise and is one of the leading experts to the Franchise Market in the UK.
For further information on franchising visit our Education Franchises section.