Archive for the ‘Financing’ Category

Ten Steps to Starting a Franchise

Thursday, August 24th, 2017
  1. Read through the franchisor’s franchise disclosure document (FDD). The franchisor is required by law to supply this document to prospective franchisees. The FDD provides information about the franchise system, such has its history and corporate structure, as well as the information about the franchise relationship, such as fees, financing, obligations, intellectual property and financial performance. Be sure to study the FDD before making any decisions. Pay particular attention to the FDD’s Item 19, which details the franchise’s earnings data. A franchise that values transparency will include the grosses, expenses and EBITDAs of all its franchises for the previous year. In other words, it should provide information so you can make the most informed decision.
  2. Do your due diligence. Talk to other franchisees who have been in business a while. Ask them what they think of the business. What are the challenges? What are the rewards? What made them decide to open a franchise? Is the franchisor easy to work with? While this is obviously a great way to get information, it may also help to form working relationships with other franchisees if you decide to open a franchise.
  3. Experience a franchise in action. Visit a franchise during business hours, see how it works, see what the franchisee and the employees have to do on a day-to-day basis. This should give you a better idea of what being a franchisee is like. Also be sure to talk to customers. Are they happy with the service the franchise provides? Would they recommend it to others? Getting a feel for the customer base is just as important as seeing what a franchise does every day.
  4. Find a franchise that offers excellent support. The great thing about buying a franchise is that you go into business for yourself, not by yourself. But this concept only works when the franchisor offers the best support in all aspects of business operations, including, but not limited to, marketing, advertising, IT, finance, training and real estate. Visiting the corporate headquarters is highly recommended.
  5. Visit the corporate headquarters. Some franchisors host a “meet our team” day that allows prospective franchisees to tour the corporate office as well as meet the people who will be supporting their business needs. This is an excellent way to get a first-hand look at how the franchisor operates.
  6. Review the terms of your franchise agreement. If you decide to pursue a franchise, the franchisor will give you its franchise agreement, which lists your obligations and theirs. It is a good idea to hire a lawyer with franchise experience to review the agreement to make sure it meets your expectations.
  7. Obtain financing. When you sign the franchise agreement, you will need to pay the franchisor. These initial costs, which vary from business to business, can amount to hundreds of thousands of dollars. Many entrepreneurs need to secure a loan, such as a Small Business Administration loan or a bank loan, to pay those fees. A franchisor that offers excellent support will often have a franchise finance team that can help you navigate the loan process.
  8. Locate a suitable site for your business. Many franchises have specific site requirements that your business will need to meet. These may include things such as square footage, a minimum lot size and a minimum number of parking spaces. A high-quality franchise will staff real estate experts who will help you with the process of finding a suitable site.
  9. Receive training. You will need to complete a series of training courses, either at the franchise’s corporate headquarters and/or online, that will teach you what you need to know to operate a franchise.
  10. Prepare to open your business. If you have never opened a business before, which includes many different things that need to be done, this process can seem daunting. A franchise with best-in-class support will provide assistance with this process, usually in the form of an openings team who will work with you to ensure your business is ready to open.

Joe Schumacher, CEO of The Goddard School Franchise, provides his advice for recent grads who are thinking about starting a business after college.

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Small Business Financing Made Easy

Tuesday, November 17th, 2015

Accessing capital for a new business can be an unfamiliar territory in the start-up process, so it’s not surprising when new franchisees have questions. Outside of securing home mortgages, many people have not had experience with commercial lending, much less government-backed loans from the Small Business Administration (SBA). This is one reason having the support of an experienced franchisor like The Goddard School Franchise can help make obtaining financing easier than navigating the finance process alone.

The Right Support

Without the right support, knowledge and guidance, the commercial lending process can be tedious. The Goddard School Franchise conducts an internal financial pre-approval screening so prospective franchisees are not awarded a license unless we feel confident that they will be financed. After an approved prospect enters into an agreement with The Goddard School Franchise, they work with the Real Estate Department to decide whether to lease or purchase a building. A member of the Franchise Finance team is available to review the finance options for both. After the site is secured, our team guides the franchisee through every step of the finance process. We explain commercial lending practices, offer resources and contacts, answer questions, provide insight and feedback and serve as a liaison between our franchisee and the lenders.

The Goddard School Franchise’s Franchise Finance Department addresses questions, provides guidance and communicates directly with the lenders to help avoid surprises along the way. We want our franchisees to have the same confidence in their loan as they do in The Goddard School brand.

Our Franchise Finance team creates an allocation of funds for each project; provides necessary templates, such as business plans and projections; directs franchisees to financing sources; reviews loan proposals and commitment letters to ensure the loan is structured properly, covers all project costs and offers competitive terms; and assists with the loan closing. This support can definitely help the finance process go more smoothly.

The Right Resources

Due to the record demand for childcare and The Goddard School Franchise’s success, reputation and unrivaled support, The Goddard School system is an approved franchise concept for many national and local lenders. We also meet the criteria for SBA eligibility, and our Franchise Finance team has great relationships with many national SBA lenders. We have one main contact with each lender who is already familiar with our model and lending needs.  Most of these lenders are part of the SBA’s Preferred Lender Program, which allows them to approve SBA loans in-house. These valuable relationships result in competitive terms and a streamlined process for our franchisees.

The Goddard School Franchise makes the financing process easy for our franchisees by providing great resources, a strong business model, superior support and knowledgeable employees. We pride ourselves on finding the right lender and terms for each franchisee, and we look forward to working with prospects who are considering joining The Goddard School family!