Franchise Financing

Your franchisor may provide sources of capital.
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Some franchisors offer direct financing to help franchisees with all or part of the costs of start-up. This may take the form of equipment, real estate or inventory financing. The goal is to fee up money so franchisees have working capital.

Many franchisors are not directly involved in lending but have established preferred relationships with banks and commercial finance companies. Because these lenders have processed loans for other franchisees, they are more familiar with new franchisees' needs.

The franchisor you're interested in can tell you about any direct financing or preferred lender programs available. The Uniform Franchise Offering Circular should also include this information.

Excerpted from Start Your Own Business: The Only Start-Up Book You'll Ever Need

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