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Researching a Franchise

First Time Funding

Do you dream of buying a business but can’t scrape together the cash? Here’s a review of your financing options as a first-time franchisee.

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How are you going to finance your first franchise purchase?

New franchises are opening every day, and that money has to come from somewhere. It isn’t easy but there are various ways of coming up with start-up capital.

On Your Own

1. Refinancing your home or taking out home-equity loans

This is fine if the franchise you choose is so inexpensive that you can cover the franchise fee and total investment (rent, equipment, supplies, employee salaries, your own living expenses and advertising) yourself. But should you need to borrow money later, your lender will want you to put up collateral, and a fully mortgaged house doesn’t qualify. Finance experts suggest you borrow only a portion of the available equity, and leave at least 25% of your home’s value intact.

2.Severance packages or savings

Down-sized executives often use their severance packages or savings to get started. Retirees without separate savings can tap into their individual retirement accounts without a tax penalty. This option can be really tricky, and should not be attempted without play-by-play assistance from an accountant.

Through a loan

Prospective franchisees who qualify can borrow start-up capital through a loan. Banks are usually open to granting loans to start-ups who are purchasing loans as they are buying into proven concepts. Most banks have a dedicated franchising unit which can also provide useful information before purchasing your first franchise.

Once a bank has had a good experience with a franchise loan, it tends to loan money to more franchisees from the same concept. Begin your financing search by talking to your potential franchisor about banking relationships and asking existing franchisees where they obtained financing.

But if the system you choose has no strong lender ties, you’ll have to build a personal relationship with a local lender.

Friends & Family

If you have spotty credit, are dealing with a new franchise company with no earnings history, or don’t own a house or even a Harley, it’s unlikely a bank will loan you money. The last stop on your financing hunt is Mom, Dad, Uncle Dan and Jim, that high-school loser who made a killing in tech stocks.

ADVICE

Friendships and families can be torn apart by such transactions, if not handled correctly. Here are some tips to keep your relationships intact:

  • Put together a business plan, including a two-year monthly forecast of your sales and expenses. Include what you’re asking of your investors, what they’ll get in return, and when they’ll get their equity back — probably not until you sell, qualify for a conventional loan, or attract the attention of one of those multimillion-rand private-equity firms.
  • Don’t build up their expectations; explain all the risks and never take money from a relative or friend who can’t afford to lose the entire sum.
  • Have an attorney who understands securities draw up a formal contract. Then if something goes wrong, it won’t come as a big shock — and you can still sit down together at holiday meals

HOT TIPS

10 Franchise Financing Tips:

  1. Talk to your franchisor before searching for outside financing; get approved or pre-qualified.
  2. The most common source of start-up capital is friends and family. Use them.
  3. Seek out lenders that understand not just business but franchising as well.
  4. Be totally honest and upfront with lenders. Hide nothing. Be prepared to explain everything.
  5. Neatness counts. Fill out your credit and loan applications clearly. Typed is better.
  6. Don’t weigh down your loan application with attached documents.
  7. Don’t exhaust your liquidity by paying off outstanding debts before filing a loan application. Lenders want you to have capital available.
  8. If you lack liquidity, find a partner with money.
  9. Consider equipment leasing to conserve start-up capital and improve the appearance of your balance sheet.
  10. Keep debts and expenses to a minimum. Many business owners take on too much debt, forgetting that cash flow must pay that debt.

Company Posts

With Hundreds Of Franchise Options Out There, Choose The One You Can Trust

If you’re looking to invest in a business venture that offers you years of experience in the industry, the trust and loyalty of its customers, and franchise support from an expert team – then Hi-Q is the one for you.

HI-Q

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What you’ll become a part of

Since opening their doors in 1999, Hi-Q has gone from strength to strength, growing a humble three store enterprise into an extensive 130-store franchise network with a unique multi-product and multi-services automotive offering.

Hi-Q’s approach to business is centred around being ‘the one you can trust’ to their customers, their suppliers and their franchisees.

“That has always been the key driver in everything we do,” says Sean Harrison, Hi-Q’s Managing Director. “For example, when it comes to our customers, they need to know they can rely on us to put their safety first.

Related: Don’t Tread On Toes – Why Investing In A HIQ Franchise Will Offer You More Opportunities

That we’ll always strive to offer them expert, friendly service and top of the range products, while also keeping up-to-date with the latest technologies and advancements in our field.”

An acclaimed and awarded brand

Hi-Q has again and again proven themselves to be a leader in the industry.

They’ve been voted South Africa’s No.1 tyre retailer for eight consecutive years (2010 – 2017) by consumers in the Ask Africa Icon Brands Survey, the biggest of its kind in Africa – a clear indication that they are respected and trusted by their customers.

Business support

Hi-Q Franchisees all have the support of an expert and knowledgeable team with years of experience in the industry, who are available to guide them on their business venture. This includes areas of business such as marketing/promotional, commercial, organisational structure, tools and equipment, sales and more.

Franchisees also have access to various skills training opportunities for members of their team.
Hi-Q is invested in providing their network with the tools needed to thrive and grow in an ever-challenging market.

Relationship with Goodyear

Hi-Q has the support and backing of international tyre of multinational premium tyre manufacturer, Goodyear, and its full value proposition. This means access to incredible promotional and marketing opportunities in partnership with the brand.

Franchising opportunities

Hi-Q has embarked on an extensive expansion plan and have identified areas of opportunity to extend their Franchise footprint growth countrywide.

You’ll find more information on our website www.hiq.co.za We’d like to invite those who are interested to become part of our team to contact 011 663 2431 or bernie_andrews@goodyear.co.za

Related: We Want To Invite You To Join Us On The Hi-Q Journey And Become A Franchisee

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Researching a Franchise

The Digital Headaches Of A Franchise Marketing Team

Here are my top 5 tools that can help control and regulate franchisees marketing with minimum friction.

JG Bezuidenhout

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Franchise marketing teams already know that managing campaigns for a business with multiple locations and/or stores is a time-consuming job.

When it comes to online marketing, many franchisees are frustrated with the mother brands’ national campaign strategy, as it may not suit their immediate needs. This often means they embark down the dangerous route of “rogue” or unapproved campaigns.

This is a huge risk for any brand as there is limited to no control over the message and quality of creative, often resulting in brand CI and best practices not being followed.

Rogue advertising can be totally avoided by a franchises’ marketing team by employing tools that allow them to set up a managed process where franchisees can advertise through. With a managed approval process (preferably automated) it is easier to manage “rouge” content.

Here are my top 5 tools that can help control and regulate franchisees marketing with minimum friction.

1. Create a consistent Facebook content experience whilst still allowing your franchisees to post to their own page

Facebook location pages makes it possible to, as an alternative, allow every store to open a Facebook page, each with different versions of your logo as their profile picture, as well as incomplete profile data or even old or past promotions as their cover image. You as a brand manager can set up each store as a location page on the brand’s main FB page.

The pages can all be linked to the main page and if you change the profile image or cover art, it will automatically update all the other pages. There are also a number of other marketing advantages to this, but most importantly for me was the ability to manage them all from a single interface and clean up all the old and abandoned pages that just confused customers.

2. Manage social media content

Gain is extremely simple to use and connected to all the popular social media platforms such as Facebook, Twitter, LinkedIn etc. As a user, you can create posts or ads and schedule them all from the same window. Once said posts are scheduled, the marketing team can preview the content and approve it for publication or request changes all within a matter of seconds.  Best of all, nothing will get posted without your approval.

3. Free professional looking content in a template

Pablo is an old favourite of mine! It supplies predefined size templates where a user can use free professional stock photos and quickly overlay text. The feature I love most on this tool is the “insert logo” feature, which with the click of a button can overlay a banner or brand element that creates consistent content experiences. Once done, you can export the image and post it to gain for approval. Simple right!

4. Create email alerts for when your brand is found online

Talk Walker alerts is a nifty tool and acts like your personal internet detective who constantly crawls the internet for keywords that you define. I like to use my clients’ brand names and sometimes even my competitors just to keep tabs on their activity. Once set up, you receive daily emails with links to the content in question.

5. Pre-approved marketing creatives and targeting with machine learning optimisation

Lead Gener8or tool can define a bespoke target audience per store and lock advertising geographical areas to prevent any cannibalisation. Once completed, franchisees can execute pre-approved marketing campaigns as and when they wish on any of the integrated channels (SMS, Email, Facebook, Google and Youtube), without any further involvement required from the marketing team.

Powered by big-data machine learning, campaigns are automatically optimised while in flight. Marketing teams can monitor all campaigns in real time. This tool really is a game changer for franchise marketing teams and brand managers.

With these tools correctly implemented into your business, the digital headache of your franchise’s marketing team can subside and focus on what you do best, delivering results!

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Company Posts

Choose A Job You Love, And You Will Never Have To Work A Day In Your Life

Join Col’Cacchio’s 26-year-long love story.

Col'Cacchio

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Vital Stats

  • Joining fee: R125 000
  • Monthly management fee: 6% of turnover
  • Monthly marketing fee: 2% of turnover
  • Total investment: approx. R2.5m to R4.2m (turnkey) Size: 140m2 to 350m2
  • Unencumbered cash (before loan): 50% of total investment

(Above figures exclude VAT) 

“Owning your own restaurant is like owning your own future.” – Dominic Dempers, Franchisee Durbanville, Belvedere & Meadowridge Cape Town

We’re looking for passionate franchisees who will love our brand as much as we do.

Why you should join this delicious success story

colcacchio-pizza-franchise-dessert

  • Assistance with site selection & lease negotiation
  • Store design & build
  • Full training provided for management and staff
  • Marketing & operational support
  • Product innovation & menu development
  • Efficiency in all systems
  • Healthy margins.

Related: 300 Business Ideas To Inspire You Into Entrepreneurship

#FoodwithaStory

“Our journey started with a single restaurant on the foreshore with the aim to serve the very best pizza around” – Greg Mommsen, Business Development Director

“Watching this brand grow and empowering people has been immensely rewarding. We have staff that have been with us for over 20 years. It’s like a family, we work hard, we laugh, we cry, we celebrate and of course, we eat a lot of pizza.” – Michael Terespolsky, Founder and Managing Director

“Becoming a franchisee is an amazing opportunity to join the family and become part of the Col’Cacchio success story. We’re 100% behind out franchises at every step, making sure that we all continue to learn and flourish” – Greg Mommsen, Business Development Director

“It has been filled with challenges along the way, but all the rewards have made every moment worth it.” – Michael Terespolsky, Founder and Managing Director

Related: Got An Awesome New Business Idea? Here’s What To Do Next

Visit www.colcacchio.co.za or call Tarryn Godley on 084 800 7264 and let’s get this adventure going.

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