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The Franchise Advantage

Pros and cons of franchises

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This story appears in the July 2000 issue of Entrepreneur. Subscribe »

Q: I'm considering buying a franchise. I've heard it may be easier to obtain financing for a franchise than an independent business. Is that true? If so, why?

A: A banker is primarily concerned with three things when looking at a loan request: management skills, repayment ability and the value of liquified assets in the event of default. A franchisor can ease these concerns by providing upfront and ongoing training, assuring the banker that someone with a vested interest will properly prepare the borrower. Bankers also look at successful franchise chains as proven entities with solid repayment abilities.

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