Franchising is one of the continuing success stories of the British business scene. The size of the UK franchise market is expected to double in the next four years and, according to the British Franchising Association, 92 percent of current franchisees’ businesses are currently making a profit.
However, not all franchises are the same and anyone considering taking on a franchise should research the details of the particular business very carefully before taking the plunge.
Although a business plan for a new franchise should be similar to that of any other business start-up, certain parts of the plan are particularly important to get right when attempting to obtain funding for a franchise from a financial institution.
Banks tend to follow a fairly standard template when deciding whether to offer finance to an individual for a franchise. Before they investigate the proposed franchise operation, they will usually want to assess the applicant’s suitability as a borrower. Besides wanting to know how much of their own money the applicant is planning to invest in the franchise, the bank will also require information about the individual’s credit history, career, skills, qualifications and, above all, their aptitude to run a successful franchise business.
For anyone considering taking on a franchise, working out how to finance the venture is often the most critical decision that has to be made.
The major high street banks are a good place to start. They have head office departments that specialise in franchise finance, allowing your local bank business advisor to find out useful information for you about potential franchise partners that might not be publicly available, as well as helping to arrange the necessary finance that would enable you to become a franchisee.
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