The principle of attraction is most frequently...
Buying a franchise is getting easier, financially speaking, according to the International Franchise Association. In fact, franchising is positioned for robust growth because demand for franchise units will increase by 12 percent in 2014, and the lending shortfall for franchises, which has existed for several years, will likely be cut in half. The result: Thousands more franchise businesses in 2015 and beyond.
Supporting this good news is another report from IHS Global Insight, which says that the franchise sector will lead America’s economic rebound by creating an estimated 220,000 jobs this year.
“With seven out of 10 franchise business lines adding jobs faster than the private sector at-large, the franchise business model continues to provide jobs and entrepreneurship opportunities for workers and entrepreneurs in sectors as diverse as hotels, auto, business and personal services, and restaurants,” explains Steve Caldeira, IFA President & CEO. “One reason for this success is that credit is steadily becoming more available for franchise expansion.”
What’s that mean for you? It means that unless your credit rating is unfit for viewing by a bank, leasing company, or another financial institution that loans people money to buy franchises, you can now buy a franchise! Money’s available if you know how to get it.
One expert who knows how is Dr. John P. Hayes who has recently written 12 Amazing Franchise Opportunities for 2015. The book (which you can request for free for a limited time at howtobuyafranchise.com) includes a chapter on franchise financing.
“If you need to borrow money to acquire a franchise,” writes Hayes, “the good news is that for the first time in many years you have multiple options available. . . . Nowadays, more community banks lend to franchisees, more franchisors lend to franchisees, several franchise-specific funds underwrite franchise acquisitions, and for those who have a retirement fund, the fund can be rolled into seed money to capitalize a business.”
As an example of funding that’s available today, but wasn’t just a year ago, Hayes writes about Franchise Loans Direct (FLD) administered by Bob Rodi out of Wexford, Pa. “We manage origination, underwriting, documentation and funding of franchise loans in the $100,000 to $5-million range in 50 states and U.S. territories,” says Rodi.
Find the Option that Works for You
Mostly he’s funding multi-unit franchisees. Single-unit buyers are not his market, but he directs them to pursue an SBA-backed loan. Hayes says that’s not the best option for borrowing today, but it’s still a viable financing plan.
A better plan may be found with a franchisor that loans money to franchisees – more and more of them exist today – and by utilizing a program like VetFran, which provides discounted fees to U.S. veterans who want to become franchisees.
Of course, you can learn about financing options at any of the expos sponsored by the International Franchise Association, including the upcoming West Coast Franchise Expo, Oct. 23-25 at the Anaheim (Ca.) Convention Center.