Most do not. Newer and smaller franchise systems, in particular, lack the resources to provide such assistance. Nevertheless, whichever franchise you select, before beginning a search for outside funding, ask what programs the franchisor has in place to help franchisees secure funding, recommends franchise veteran Rick Anderson. The general manager of franchising of Little Rock, Arkansas-based Franchise Finance says his company works with a number of franchise systems that are preapproved. When a prospective franchisee comes to us for funding, we don t have to underwrite the franchise system, so the loan is processed that much faster.
Many finance companies have similar relationships with franchisors.
In the absence of such relationships, search the Internet for franchise financing sites, banks, finance companies and equipment leasing firms. We consider their credit report, net worth, liquidity and outside income, he says. Franchise Finance likes borrowers to have 30 percent of the purchase price in cash as well as some assets and backup income during the initial stages of their businesses. Other lenders are similarly inclined. They weren t impressed by my numbers, he reports.