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How do I finance a franchise, and can I get a loan to buy the franchise? The essential information you need to know when looking to fund your franchise business.
One of the most important questions to ask when thinking about a franchise is how much do I want to pay for my franchise and how will I fund it?
Many people use their own money, topped up with loans from the bank. Lenders tend to see franchises as a good investment because franchises are a proven business opportunity – others have ‘been there and done that’ before you and been successful already.
So, the risk to lenders is lower than untested and unproven business models. In this article we will look at the various funding options for financing your franchise and discuss how we at GoodOaks Homecare, help guide our franchisees through the process of funding their home care franchise.
How much does a franchise cost and how much will I need to finance?
Franchise fees vary across the spectrum, for example a cleaning franchise will have lower start up costs than a restaurant or fast-food franchise, because there won’t be premises costs and wholesale food buy-in. Before you look to finance a business, you need to know how much you will need to spend, so first:
- Do your research. Find out what the franchisee fees are and then what the total set up costs will be.
- How will I finance it? Ask yourself – do you have the funds to part-fund your project? As a general rule, it is considered good practice to raise at least at least a third of the total costs yourself. Although you can get up to 70% funding in some case, funders will want you to put some ‘skin in the game’. The newer the franchise, the higher the funds you are likely to have to raise yourself, as the business has had less time to ‘prove itself’ as a business model in the eyes of lenders.
- Get a plan together – One of the most important things that a bank or lender will look at when you approach them for funding is a Business Plan. They will want to see your set-up plans, personal funding options and income projections. Your franchisor may be able to help you with this. You will have to look at factors like, how long will you need to pay the loan off, how much money will you need to live on while you get up and running and what level of pay back will you be able to afford at the are minimum? The more planned and organised you are, the better your chances of securing the funding you need.
- Get your credit history in shape – The other important factor lenders look at will be your personal credit history, so it’s important to make sure your credit score is good.
Can I get a loan to buy a franchise?
This depends on a number of factors mentioned above. However, if you have a solid Business Plan, good return projections and a proven franchise plan, then most lenders will be prepared to discuss your finance needs.
How to finance a franchise business
One of the most popular options to finance your franchise, other than a bank loan, is a Start Up Loan from the Government. You can apply for a loan, backed by the Government, for between £500 and £25,000 to start your business. The programme offers 12 months of free mentoring and help writing a business plan. The loans are charged at a fixed interest rate of 6% per year, and repayment is over 1-5 years.
How does GoodOaks HomeCare help its franchisees with funding?
At GoodOaks Homecare, our business model is tried, tested and trusted. You can read all about the first steps in setting up a home care agency franchise here. We provide access to everything you will need to set-up and run a successful home care franchise agency. Early adopters of our franchise package will benefit from highly competitive fees. The initial joining fee is £14,000 and you will also need additional working capital to pay for business expenses. We estimate that you will need a total investment of over £30,000.
Because banks recognise the success of franchising in creating profitable, sustainable businesses, they are often willing to lend between 50 and 70 per cent of the total investment required. We have been running our franchised elderly home care franchise model since 2011 so we have a clear roadmap of success, when you purchase a franchise from us, you will be benefitting from years of experience and investment into our processes, including Business Planning, cutting edge benchmarking tools, digital marketing and PR help, branding and IT support, as well as much more.
Our early adopter pricing means you need to invest less before you start gaining revenue, freeing up your capital to spend on growing your business. This means you can invest in your staff wages, on marketing your company, and establishing a high-quality service, reaching your break-even point faster.
We will be with you every step of the way, because we pride ourselves on only working with those that share our caring ethos. When you start a Home Care franchise, you are helping people in your community to lead independent and happy lives in their own homes. We will help you create your business plan, set-up your office, get all the accreditations and support you need and help you recruit the best carers and managers. We know your team makes the business and at GoodOaks Homecare, we believe in investing in the caring people that work with us.Many people use their own money, topped up with loans from the bank. Lenders tend to see franchises as a good investment because franchises are a proven business opportunity – others have ‘been there and done that’ before you and been successful already.
So, the risk to lenders is lower than untested and unproven business models. In this article we will look at the various funding options for financing your franchise and discuss how we at GoodOaks Homecare, help guide our franchisees through the process of funding their home care franchise.
How much does a franchise cost and how much will I need to finance?
Franchise fees vary across the spectrum, for example a cleaning franchise will have lower start up costs than a restaurant or fast-food franchise, because there won’t be premises costs and wholesale food buy-in. Before you look to finance a business, you need to know how much you will need to spend, so first:
- Do your research. Find out what the franchisee fees are and then what the total set up costs will be.
- How will I finance it? Ask yourself – do you have the funds to part-fund your project? As a general rule, it is considered good practice to raise at least at least a third of the total costs yourself. Although you can get up to 70% funding in some case, funders will want you to put some ‘skin in the game’. The newer the franchise, the higher the funds you are likely to have to raise yourself, as the business has had less time to ‘prove itself’ as a business model in the eyes of lenders.
- Get a plan together – One of the most important things that a bank or lender will look at when you approach them for funding is a Business Plan. They will want to see your set-up plans, personal funding options and income projections. Your franchisor may be able to help you with this. You will have to look at factors like, how long will you need to pay the loan off, how much money will you need to live on while you get up and running and what level of pay back will you be able to afford at the are minimum? The more planned and organised you are, the better your chances of securing the funding you need.
- Get your credit history in shape – The other important factor lenders look at will be your personal credit history, so it’s important to make sure your credit score is good.
Can I get a loan to buy a franchise?
This depends on a number of factors mentioned above. However, if you have a solid Business Plan, good return projections and a proven franchise plan, then most lenders will be prepared to discuss your finance needs.
How to finance a franchise business
One of the most popular options to finance your franchise, other than a bank loan, is a Start Up Loan from the Government. You can apply for a loan, backed by the Government, for between £500 and £25,000 to start your business. The programme offers 12 months of free mentoring and help writing a business plan. The loans are charged at a fixed interest rate of 6% per year, and repayment is over 1-5 years.
How does GoodOaks HomeCare help its franchisees with funding?
At GoodOaks Homecare, our business model is tried, tested and trusted. You can read all about the first steps in setting up a home care agency franchise here. We provide access to everything you will need to set-up and run a successful home care franchise agency. Early adopters of our franchise package will benefit from highly competitive fees. The initial joining fee is £14,000 and you will also need additional working capital to pay for business expenses. We estimate that you will need a total investment of over £30,000.
