If you’ve browsed the franchise opportunities on our website you may have seen that some of our franchisors offer special assistance to those looking for funding. In the following Q&A, Auditel’s Norman Grossman talks to us about the process for Auditel’s franchisees and what a prospective franchise owner can expect.
1. What type of financial assistance does Auditel offer to its franchisees, and where does it come from?
Auditel recommends bank finance to assist any prospective franchisees who require additional funding.
2. What are the advantages of getting financial assistance from Auditel?
Funding is available from the bank for franchises, like Auditel, who have been accepted by the bank franchise departments as having a good track record. Auditel also enjoys very strong relationships with all the major bank franchise managers, several of whom have been guests at their Discovery Seminars for a number of years.
3. If a franchisee would like to get assistance, what is the process?
Auditel will call the Franchise Department of the bank, where the prospective franchisee already has an account. The bank will locate the most appropriate branch and advise the manager to expect a call. Both parties can then fix an appointment to discuss the proposition.
4. What will franchisees need in order to take advantage of this?
The first step is to establish how much money can be invested in the business and what needs to be borrowed. For an established and successful franchise, likeAuditel, most banks will lend up to 70% of the total start-up costs.
To help the bank assess any request for finance, the applicant should supply a copy of their business plan prior to the initial meeting. This should consist of a cashflow forecast and operating budget. Auditel can offer help in preparing these projections.
The manager will discuss such matters as security and interest on the funding. There are a variety of schemes available. For example, HSBC say, “The need for security depends on the amount borrowed and how much stake is available. This is commonly a charge over the domestic property, although there may be business assets which could be taken as security. If there is insufficient conventional security, it may be possible to use the government’s Enterprise Finance Guarantee scheme. Interest rates vary depending on the amount borrowed, how much stake you have, what security is available etc. However, franchising is seen as a less risky way of starting a business, so it is likely that interest rates for a franchise owner of an established franchise would be lower than those for a stand-alone business.”
Norman Grossman is Auditel’s Press Officer and has been involved in franchising for over 35 years.