Your franchisor. To keep their growth from stalling, many franchisors are offering unprecedented levels of franchisee assistance (see "Turn to Your Franchisor"). Some are making loans themselves, while others are discounting franchise fees or letting new franchisees pay their fees over time.
"Franchisors are offering incredible deals," says business-acquisition specialist Ted Leverette of Partner On-Call Network in Florida. "Some are waiving fees completely. Choose a franchisor who 's willing to share the risk with you."
At the very least, your franchisor should help you beef up your loan paperwork. For instance, some franchisors are purchasing bank credit reports on their company from FranData, which explain franchisor financials and present the concept in a positive light.
Get a UBLOC. The acronym stands
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The company 's venture fund has $5 million raised privately, and Farid hopes to grow it to $10 million.
So far, Edible 's leasing program is available only to Edible franchisees, who can get up to $100,000 to cover equipment costs. But Farid Capital Corp. may eventually broaden to offer financing to the franchising industry in general, Farid says.
Other chains, including Florida-based CruiseOne, are offering straightforward loans to cover startup costs. Senior vice president and general manager Dwain Wall says his travel company began offering new franchisees financing for $7,300 of their $9,800 franchise fee in August. Because CruiseOne uses a home-based business model, the fee usually constitutes most of the startup cost.
The loan carries an interest rate of prime plus 6 percent--not exactly cheap, but moderate in today 's lending climate. With more than 500 locations and plans to open up to 100 more in the next 12 months, Wall says it 's important to help CruiseOne franchisees get started to keep growth on
...y expand their sales base by having smaller businesses sell their products where it would be economical unfeasible for them to set up a branch. Practitioners such as bankers can provide support in the form of soft money to new businesses such as partial grants which do not have to be paid off until the business reached a certain size or level of profitability. (Disabilitymeansbusiness.com 2013)
3-33. While franchise owners must have at least $125,000 of cash available, average startup costs are more then double this amount. What are the most likely sources of funding a franchise?
Moore, L 1997, The Flight to Franchising, US News & World Report. June 10, pp. 78-81.
As of the end of 2009 Panera had yet to access its $250 million credit facility. If Moreton continues to keep Panera’s total assets at approximately three and a half times its total liabilities Panera should not have to access that credit facility nor should the company have to worry about having to pass up a future strategic alliance or acquisition. Low debts, high assets, and continued watchfulness of all business operations are the key to Panera’s future success.
o Pay $200,000 up front for development fees and franchise fees for the first five stores
PepsiCo can potentially acquire California Pizza Kitchen and integrate it in the company’s decentralized management approach. Since PepsiCo executives have experience in the quick service food industry, it should not be a reach for the company to successfully run this casual dining restaurant. For this venture to be successful, it is imperative that management cut down the operating costs at California Pizza Kitchen through the PepsiCo Food Systems distribution network and improve on the 3.1% operating margin that California Pizza Kitchen is currently operating at.
American Express has always been known for its benefits to travelers. Some of the new travel discounts; such as the “Bahamas Getaway” packages offer significant discounts for planning a vacation in the Bahamas through a travel agent. The catch is that one must charge it on the American Express card to get the discounts. Coupon books that offer discounts at many shops, restaurants and attractions are given to those who buy a package. Over $11 million in “Bahama Getaway” packages were sold in 1999. Other getaway packages are available to consumers all over the world. American Express has successfully used this marketing strategy, as it realized that consumers want an opportunity to enjoy an exotic vacation, while at the same time, getting value for their dollar. Saving money is important to most consumers. Once again, American Express aims to please its customers.
Demand for Panera franchising opportunities was very high, which allowed Panera to be picky about where and with whom they would do business. Panera determined where bakery-café locations could be. The franchisees bore the cost of opening new locations, and were required to obtain their ingredients from the home company. Expansion using the franchise model provided many upside benefits for Panera, while limiting the downside r...
There was a trend in rise of the net property & equipment related assets since 2002 to 2004. This boost in net property and equipment assets was related to the acquisition strategy conducted by Applebee’s. For the $34 millions acquisitions of 21 restaurants in Washington D.C. area on November 7, 2002; $24 millions has been allocated to the fair value of property and equipment plus $10 millions in goodwill. This has caused a jump in net property & equipment assets for 2002 to jumped 16% and Intangibles assets to jumped 12% when compared to 2001. Since most of the purchased are by cash, this has caused a 31% decreased in the Cash & Equivalents for Applebee’s balance sheet. For the 11 Applebee’s restaurants acquisitions in Illinois, Indianan, Kentucky, and Missouri for $21.8 million on March 24, 2003, $7.9 millions were allocated to the fair value of property and equipment, the other $16.6 millions went to goodwill, plus a net liabilities in additions of $1.3...
Debt financing has both advantages and disadvantages. Debt financing is a business’ way to start up, expand, or recover by borrowing money from a preson or company. The money borrowed has to be paid back along with the interest that was accrued during the length of time the loan was carried out. This option is great for company’s that do not want investors. Debt financing is beneficial because the loaners do not often get involved with the company or any decision making within the company. The downfall is the risk that is assumed with the debt which is, the company may not be able to pay back the loaner. In that case, the loaner would go after the owner or partner personally. There are many forms of debt a company is allowed to take on, such as ‘venture’ debt, even if they are a high-risk corporation. ‘Venture’ debt is a form of senior debt ...
Borrow long-term loans from local banks – These are a common way of financing major purchases of an organization. An advantage is that it is directly linked to an organizations operating capacity. Another advantage of long-term loans from local banks is that it enables a firm engage in large projects. Although its disadvantage is that the banks charge high interest rates.
A franchise, by definition is a legal agreement that allows one organization with a product, idea, name or trademark to grant certain rights and information about operating a business to an independent business owner. In return, the business owner (franchisee) pays a fee and royalties to the owner. This one-time fee paid by the franchisee to the franchisor is referred to as a franchise fee. The fee pays for the business concept, rights to use trademarks, management assistance and other services from the franchisor. This fee gives the franchisee the right to open and operate a business using the franchisor’s business ideas and products. A royalty fee is a continuous fee paid by the franchisee to the franchisor. The royalty fee is usually a percentage of the gross revenue earned by the franchisee. The Federal Trade Commission (FTC) is authorized by the United States Congress to regulate the franchise business. The Federal Trade Commission oversees the implementation of the Franchise Trade Rule, which requires that franchisors disclose all pertinent information to potential buyers of a franchise, and monitors the activities of franchisors.
Chaurasiya, K. and Profile, V. 2010. Advantages and disadvantages of acquisition | business management strategy. [online] Available at: http://businessofaccouting.blogspot.co.uk/2010/04/advantages-and-disadvantages-of.html [Accessed: 8 Mar 2014].
financing. They are often comparatively modest, in-order to help the founders get on their feet, build
Smaller companies are much more likely to obtain an attentive audience with a commercial loan officer after the start-up phase has been completed. In determining whether to extend debt financing--essentially, make a loan--bankers look first at general credit rating, collateral and your ability to repay. Bankers also closely examine the nature of your business, your management team, competition, industry trends and the way you plan to use the proceeds. A well-drafted loan proposal and business plan will go a long way in demonstrating your company's creditworthiness to the prospective lender.