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Franchise Funding and the Importance of Pre-Qualification
Are you still wondering if you can afford to buy a franchise? While most franchises cost between $50,000 and $200,000 to get started; there are some like mobile concepts that can run much less and others like hotels that can exceed $5 million. Given the fact that franchise brands can vary so greatly in terms of costs, some individuals may be able to afford a luxury brand or more expensive franchise concept, while others may only be able to afford a franchise that costs much less. Knowing how much you have to work with in advance can better help you identify which brands you should consider.
This is where pre-qualification comes into play.
Just as you probably wouldn’t go looking to buy a house without pre-qualifying for a mortgage, you shouldn’t look to purchase a business without pre-qualifying for funding.
Here’s why:
- You will know beforehand if you have the ‘fundability’ necessary to purchase a particular franchise or if you need to re-evaluate your options
- It speeds up the purchase process so you don’t have to worry about funding delays when you’re ready to move forward
- Getting pre-qualified for funding will allow you to focus on the “what’s” of the business, rather than the “how’s”
Know your pre-qualification options
There are a variety of pre-qualification tools and programs available for you to utilize. For instance, there are simpler, more automated ones that can provide a quick calculation of some of the different funding options that may be available to you based on input you provide. Then there are more advanced pre-qualification programs that require more in-depth paperwork, and may provide some sort of pre-qualification certificate for you to show the franchise you’re interested in purchasing. Some tools and programs are FREE, others are not. Some provide a funding amount you may be eligible for, others do not. Some let you speak with a live funding expert, some do not.
Whatever it is you prefer, a good place to initially start is an automated funding tool that provides your funding potential. Here’s an example of one we put together: https://www.benetrends.com/funding-calculator.
While it is NOT an actual loan commitment, it is an early determination of what amount and options you could qualify for based on your unique situation. Many individuals have found it to be helpful in identifying which franchise concepts they can best afford. Plus, it’s free and requires no obligation on your part–so you really have nothing to lose!
