Editor's note: For more information on financing your franchise, go to financing options.
It takes a substantial amount of money to buy a franchise, not to mention cover the costs of supplies, overhead and, in some cases, building a location. Understandably, many franchisees find that kind of capital tough to secure. But rest assured: If you're considering buying a franchise, money doesn't have to be an object. Throw away any preconceived notions about needing to be born rich or have $1 million in savings to get into franchising-these franchisees are living proof that a dream, perseverance and financing options can create a perfect recipe for franchise ownership.
All Wrapped Up
When Stan Harris tried to purchase his Charlotte, North Carolina, Great Wraps, he had no luck securing a loan from financial institutions to fund his wrapped-sandwich restaurant. Even the bank where he worked as a mutual funds sales representative rejected his loan application. No banks provided Harris a formal reason for not approving the loan, other than they were unable to fund such a project.
His frustration mounted. "I put a lot of time and effort into creating my business plan and trying to make this happen," says Harris, 44. Rather than give up, he forged ahead, fired up by his belief that the wrap concept would explode in popularity in the near future.
"It's been my lifelong dream to own and operate my own business," says Harris. Growing up in Detroit, "most people thought once you graduated from high school, your only alternative was to work for GM or the other big car manufacturers," he recalls. "My father wanted me to avoid that path." Consequently, when it came to pursuing his franchisee dreams, even in the face of financial hurdles, Harris says he "was very persistent."
In all the time he spent pounding the pavement from one bank to another, Harris never stopped to consider the financial risk involved in making the move from employee to franchisee. "Honestly, I only thought about opening up my Great Wraps and being successful," says Harris. He hoped his change of career could also provide his children with future opportunities.
Harris' luck turned around the very day he was turned down by the last bank he applied at. He had heard about community development lender Self-Help Credit Union and called them up immediately. With a mission to create ownership and economic opportunities for women, minorities, rural residents and low-income families, Self-Help asked Harris to tell them the actual costs of the franchise and location. After Harris came up with a number-$200,000-the SBA underwrote a loan through Self-Help to finance him as long as he came up with 20 percent of the sum, which he gathered from his savings and 401(k).
Harris' experience taught him that loan approval requires several components: an excellent business plan, good credit and the ability to contribute a portion of the financing. "I've learned that everyone wants to know what you're willing to put on the table before they're willing to make a contribution," says Harris. He also received some sage advice from his wife: "To have people believe in your dream, you have to believe in yourself." He's glad he went the extra mile to make that dream a reality.