Franchising financing is an integral part of Canadian entrepreneurs’ challenges to get and build a successful Canadian franchise. Like most Canada business owners quickly find, the franchise owner does not provide direct or indirect financing on the Canadian market. This makes business owners basically for producing the capital they need from bank charter, financial companies, and other institutions.
It does not need to be said that beginner entrepreneurs need to first make a significant investment in general franchise knowledge – i.e. Pros and cons, and of course focus on franchising financing.
Franchises in Canada are related products and services. When you buy a franchise, you must have a strong level of trust that this concept is proven and successful, because you will try to mimic the success by product, service, and awareness of the franchise brand.
Franchises are encouraged to carry out the appropriate thorough test level based on the availability of information regarding the success of the Franchisor’s business. If you are considered a franchise owned and run by a well-known public company – Think McDonalds! You certainly have the ability to review carefully financial statements and management management available for anyone based on the company listed on the Public Stock Exchange.
Good news about franchising financing and the risk of business entrepreneurs is that there are a large number of disclosures needed by the law to you as a franchise owner. In Canada, as well as the United States you must have the ability to get a copy of the Franchisors financial report. If you feel not eligible for reading and interpreting financial statements you must use services from trusted franchising financing advisers, or even your accountants or lawyers will be a good choice.
Many franchise owners in Canada are of course happy to give your franchisee reference, and you should clearly talk to other franchisees about financial performance in connection with what you expect to be achieved based on your personal investment and loan funds. When we say our ‘financial performance’ of course means general business basics such as sales, profits, working capital challenges, leverage (how many debts you need to do), etc.
In financing franchises, you clearly want to understand how much debt you will take – this is also commensurate directly with what you need to enter into the business as your own investment. Most business owners today are fully aware that franchises will never be 100% OPM. OPM = other peoples money!