Franchise Financing

Q: How can a regular guy like myself receive financing for a franchise or even find an investor who is willing to front the money while I run the business?
–A. Little, Via the Internet

A: Keep in mind that one of the benefits of franchising is that there is a built-in support mechanism in place for you -a network of resources. Many franchisors will help secure financing for qualified candidates to get started, and if they don’t provide the financing themselves, often they can recommend an independent firm that provides loans.

Before you get started, make sure that you go through the franchisor’s Uniform Franchise Offering Circular, a legal document that provides the information needed to evaluate the franchisor. All legitimate franchisors should have these available. If they don’t, that’s a major red flag.

If you’re not proficient at reading over legal and accounting information, you might want to retain a franchise lawyer. One good resource is the Federal Trade Commission’s A Consumer Guide to Buying a Franchise. The guide, which offers lots of advice on how to choose the right franchise, is available online at the FTC’s Website: (www.ftc.gov/bcp/ conline/pubs/invest/buyfran.htm). For information on the hottest franchise areas, read “10 Hottest Deals in Franchising” in this issue.

For more information on franchising, go to the International Franchise Association at www.franchise.org or visit BLACK ENTERPRISE’s franchising section online at blackenterprise.com.

ACROSS THE WEB