So Many Choices

5 Great Sources for Franchise Funding

Increasingly, creativity is the name of the game when it comes to finding start-up capital, and nowhere is that more evident than in franchise financing. Here are five innovative approaches to funding:

1.The Sports Section, specializing in photographing youth sports teams, offers an independent contractor program allowing people a 3-year commitment working within an established franchised territory. It costs a fraction of the normal franchise fee. For details, call (800) 321-9127, ext. 141.

2. Chicago-area Hispanics can learn how to select, purchase, finance and maintain a franchise through the Latino Franchise Project. Created by the Hispanic Housing Development Corp., this program helps people connect with franchisors, navigate through the legal requirements and secure a portion of financing. Entrepreneurs must locate within a Latino community, hire more than 50 percent of employees from the neighborhood, and have available cash equivalent to at least 10 percent of the cost. For information, call (312) 443-1360.

3. Labe Bank in Chicago finances franchises for immigrants and prospective franchisees typically considered a bad credit risk. Among the approaches Labe uses: extending a line of credit instead of making a loan; accepting as collateral property owned by relatives or deposit accounts at the bank; and considering payment of rent, utilities and even loans from family members as evidence of repayment history. For information, call (773) 267-2700.

4.MaidPro's Road to Ownership program helps entrepreneurs work their way into franchise ownership. Qualified individuals work at a management-trainee wage learning the business for one to two years--helping them earn the $7,900 franchise fee. The company also co-signs a portion of a loan for any additional cash needed.

5. Cendant Hotel Group offers African Americans, Hispanics and Native Americans an incentive of up to $150,000 through its Keys To Success program. If you meet company credit and franchise requirements, have cash equal to 20 percent of the property value and satisfy Cendant brand quality assurance criteria, Cendant rebates a per-room development fee you can use for debt reduction, property improvement or, if a bank is willing, as part of the loan collateral.


Andrew A. Caffey is a practicing franchise attorney in the Washington, DC, area; an internationally recognized specialist in franchise and business opportunity law; and the former General Counsel of the International Franchise Association. Cynthia E. Griffin is a journalist in Los Angeles, California. Devlin Smith is a staff writer for Entrepreneur magazine.

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This article was originally published in the August 2002 print edition of Entrepreneur with the headline: So Many Choices.

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