One of the greatest advantages of investing in a franchise over building a business from scratch is the ability to leverage your investment.
While some banks will still loan funds to a qualified individual to start a business, they are few and far between. With the state of the industry, you now have to provide not only more but a higher quality of information to the lenders to improve your chance of getting a loan. When investing in a franchise, the loan process is easier. Franchise companies have a track record of other business owners who have run this type of business successfully. They provide the FDD which contains exact start-up costs, materials, suppliers and more.
Franchisors many times have relationships with lenders that help their franchise prospects apply for and obtain funding. A franchise broker can also give you access to lending information, companies that they recommend and would (or maybe have) used, giving you direct access to companies and contacts that know the benefits of franchising and helping your chances of getting the loan to start your business.
This all makes sense, if you were loaning your money, wouldn’t you want to see the highest chance of success possible for your borrower? Franchising has proven time and time again to provide this. Therefore, banks prefer a business with data, statistics, and proof to back up the borrower’s forecast.
