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An Alternative to Franchise Finance – Private Investors

July 12, 2010 by Frank Goley, Business Consultant

Franchise Finance

With bank and franchise finance drying up in this economy, a smart entrepreneur came up with a solution. A platform to link investors with potential franchisees. FranEquity provides a platform where a potential franchisee in need of money can present an opportunity and accumulate investors into a group so the franchisee can qualify for bank or traditional finance. This platform also matches franchisors with investors.  

This type of system really opens the doors for many entrepreneurs seeking capital to start or grow a franchise. Here are some applications of this concept which may be helpful in your capital raising efforts:

Ø  If you want to fund a franchise start up but lack capital and expertise, then consider putting together a local private investor group to fund 40-50% of the funds necessary and then finance the rest with the bank. Use a good law firm to set up the investment group and define the rules.

Ø  Already a business owner and want to franchise your concept? Don’t have the funds? Consider forming a private investment group so you can develop the system and do some test franchises. Leverage your investment group into larger bank finance when ready to sell your franchise concept.

Ø  Already own a franchise but can’t get financed for more units? Consider forming a private investment group to help you qualify under the franchisor terms.

There are a ton of applications and advantages to this franchise finance concept. Namely, if a franchisee has the expertise to run a franchise unit, then he or she shouldn’t be disqualified for lack of funding. It is a win-win for both the franchisee and the franchisor during a period of tough business finance acquisition. Apply it to your circumstance and see what creative ways you can come up with to enter the franchise market.  

Disclaimer: ABC Business Consulting is not offering investment or finance, nor endorsing a particular company in this blog post. Please conduct your due diligence and utilize legal help when considering such a strategy.

Video Resource: Bank Franchise Finance


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