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Introduction to the Report

Financing Franchise-1

Franchise Financing Report Introduction

“Any informed borrower is simply less vulnerable to fraud and abuse.”

~ Alan Greenspan, former Chairman of the Federal Reserve of the United States


Running a franchise can be a fulfilling business endeavor, one that requires making important investment decisions before the business takes off.


Most prospective small business owners and franchisees do not have immediate access to all of the necessary funding to cover initial costs. Finding the right financial assistance to bridge the gap between what you have and what you need is paramount to accomplishing your business goals.


Financing Franchise - Image 1“The financial markets are still struggling from the economic downturn, and because of that underwriting requirements are extremely high and access to capital is still tight,” says David Nilssen of Guidant Financial, a company dedicated to helping prospective franchisees and small business owners acquire the capital they need to open their doors.


The current cautious state of the lending market warrants a proactive search for the right funding opportunities. This means taking an honest look at personal finances and talking openly with potential lenders. Realistic expectations and aspirations are a protection and franchisees are encouraged to know their limits, seeking out potential franchise opportunities that make real sense considering their financial situation.


“In franchising, financing is still thought of as an afterthought and what we’re trying to do [at Guidant] is help our clients look at it more like prequalifying for a mortgage,” says David. “Typically, a realtor won’t go show you a home, if you’re looking to go buy a property, until you’ve been prequalified by a lender so they show you concepts you can actually afford. [Guidant Financial is] trying to bring that same discipline to small business and franchising.”


Financing Franchise - Image 2Remain optimistic as you search for financing. “There is some light at the end of the tunnel,” says Joel Libava, The Franchise King. “Lenders are lending more than they have been as of late.”


There’s also good news for specific demographic groups looking for financing. Organizations are focusing on helping groups like minorities, military veterans, and women find the financing they need to start their own businesses. For example, “The US Small Business Administration recently announced the SBA Veteran Pledge Initiative. Its top national, regional and community lenders have collectively agreed to increase their lending activity to veterans by five percent per year for the next five years,” according to Joel.


This report contains information and tips to guide you along the path of financing your franchise endeavor, including:

  • An overview of the initial costs of opening a franchise
  • Information on what to prepare before you contact lenders
  • Options that can be used to finance your franchise
  • Case studies of financing options franchisees have successfully used
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