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Do we pay our franchise fee before or after we close on our loan?

min read
Opinions expressed by Entrepreneur contributors are their own.
They say that timing is everything and your question shows the truth in that statement. It's kind of a "which came first, the chicken or the egg?" question. I'll answer it two ways:

Here's the way it usually works. Any cash payment you make toward the expenses of starting the business (such as the initial franchise fee) is typically counted as part of your 20 percent cash down payment. Given that, when you pay your franchise fee it is exactly the same as if you had retained the cash to show the lender at closing so it shouldn't be any problem to pay it now. A word to the wise though, make sure to double check with the lender to confirm that this is the case before you pay the fee.

The second answer is that you should talk to the lender about this and any other questions you may have before you take any action. The lender has gone through this process lots of times and they are used to being asked questions. Don't worry about appearing like you don't know all the answers--you are the customer in this relationship and have every right to make sure your understanding is complete.

A lender likes a customer that asks when they are not sure about something--it gives them confidence that you'll avoid other future problems by better communication.

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