Financing a business, especially a franchise business, goes beyond just having some capital to start – you need to factor in everything from start-up capital to ongoing financing; from hidden costs to expansion funds. The financing of a franchise is always a huge hurdle that needs to be overcome through thorough research and careful planning. This is the one area of your business that needs a level head, clear thinking and to a large extent, a realistic approach. Don’t be afraid to ask your prospective franchisor, your financier and yourself these pertinent questions.
Ask the Franchisor….
How much will my total investment cost me?
This is probably the most important question as not all franchises calculate this cost in the same way. Some include certain costs, while others only add them on later. Knowing what makes up your total investment is important from the outset as this will influence which franchise you choose and whether you are able to afford the business. The total investment is the complete cost of starting up the franchise operation and should include the up-front fees, set-up and establishment costs and start up stock.