We can talk all day about how fantastic it would be to own a business. How great would it be to finally take control over our lives, our careers, and our income potential? Or to gain this control while building the personal wealth and equity not possible in the corporate world?
We can envision the pride that comes with business ownership, the relationships built with the staff, the customers, and the community.
We can even think of business ownership from a legacy standpoint. After all, can you pass on your Vice President position to your kids? Of course not. However, you can absolutely pass on your business to your children. Or, at the very least, you can cash out the wealth and equity in your business by selling it when you decide you are ready to move on.
None of this matters however if we can neither afford a franchise, nor fund it.
The total investment, the cash required, and the uncertainty on what funding options are available can be frightening. Much of the fear however, is simply based on lack of knowledge.
The common perception states owning a franchise requires hundreds of thousands of dollars in cash and a net worth over $1M. The reality is, unless we are looking at big food/retail franchises, this is just not true.
In fact, there are several hundred franchises that require a cash injection similar to buying a small house. These same franchises also have funding options available to them that are easier to qualify for than some mortgages.
So, the cash required is no longer daunting, that’s great. However, funding options can provide their own misconceptions.
It can be next to impossible to convince a bank to give you a six figure plus loan for a start-up. What proof do you have the business will work? How can you prove to the bank you have what it takes to own a business? And what assets do you have the bank can acquire if/when you fail?
Funding options for a franchise are significantly easier.
The bank knows a franchise has a track record of success. The bank knows a franchise thoroughly vets potential owners and then extensively trains and supports new owners to help ensure their success. And therefore, for some franchises, the bank does not even require collateral outside of the initial cash injection to the business.
Furthermore, there are a half dozen or more different types of funding available for a franchise. These can be stand-alone funding options or they can be used in conjunction with one another. And, there are companies out there whose sole existence is to help potential owners find the best funding options to fit their financial portfolio.
OK, now the funding picture is clearer, there is one last common myth for franchise ownership.
How can a franchise help me replace my corporate salary? We are often asked by clients, “I need to replace $xxx,xxx corporate income, what franchise do you have that can provide this time of money to me?”
The answer is simple. Any of them.
It is all about finding the perfect fit for what someone can do, and wants to do, as an owner. Once we have the fit, we simply scale the business accordingly to reach the financial goals. As an example, Subway owners don’t get rich from one store. That is why they own dozens. For some clients, one unit of the right franchise is enough. For others, the right number of units could be 10 or more.
Finding the right franchise, in the right investment range, and with the right funding options is not a one-size fits all proposition. Fortunately, FranCoach is here to help educate clients on the investment ranges, the funding options available, and the financial qualifications required, in addition to helping clients find the franchise that best matches their skills, goals, and core competencies.