There's Lots of Free Help for Choosing and Funding the Right Franchise Opportunity Franchises have the allure of a ready-made business but it's more complicated than that.
By Kedma Ough Edited by Dan Bova
Opinions expressed by Entrepreneur contributors are their own.
As an avid researcher of out-of-the box funding and resources, I rarely find a company that has set the bar so high that it's hard to look at any other competitors. Then, last month at the National Small Business Development Center Conference, I attended a workshop taught by John Blair, the marketing director for Frannet, a franchise-consulting firm with more than 55 offices nationwide.
Frannet provides, absolutely free, tools, resources and advice for eager franchisee wannabes. If you are considering franchising, connect with this firm.
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Frannet is endorsed through the Small Business Development Centers (SBDC) Program, a program administered through the U.S. Small Business Administration (SBA). As part of this collaborative initiative, entrepreneurs can connect with one of 900 SBDC offices nationwide to get access to the Frannet advising and guidance, completely free. In addition, the company offers free online franchise seminars that cover various topics.
Free personal franchise assessment report
Frannet has developed a Personal Franchise Assessment (PFA) tool that provides prospective owners insight into their goals, skills set and lifestyle so the potential franchisee can be matched with the correct franchise opportunity. The assessment is categorized into four key indicators: achiever, emulator, belonger and societal. I completed the PFA assessment and was impressed that it aligned with my personality, suggesting several types of franchise businesses based on my personality and interests.
Funding options for prospective franchisees
One of the most popular program means to fund a business or recapitalize an existing business without paying taxes or penalties on the transaction is through the rollover for business start-up program (ROBS). Essentially, the individual is investing in themselves and their future by buying stock in their own company.
A very high percentage of businesses under $200,000 are funded in this way. It is also used frequently as the equity injection for an SBA or conventional loan. One of the advantages of this plan is it's not based on the individual's credit score. It's important to understand that the individual is not borrowing against their 401(k). The new retirement plan has simply invested in the franchise business instead of investing in another company's stocks or bonds.
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Frannet works with three highly qualified lenders -- Benetrends, FranFund and Guidant Financial -- to support access to capital for franchisees.
- Benetrends, a leading authority on franchising and small business funding, is acclaimed for its Rainmaker Plan(r) that enables entrepreneurs to use their qualified retirement plan to purchase, or recapitalize, a business or franchise, tax deferred and penalty free.
- FranFund works with potential business owners to identify the best funding options for their situation. FranFund acts as a concierge service for funding solutions and has several loan options, lines of credit, securities backed funding and the Rollover for Business Start-Up Program.
- Guidant Financial is a small business financing company that specializing in 401k rollovers that help clients to use retirement funds to invest in or finance a business, without tax penalties.
Tax credits for veterans starting franchises
The International Franchise Association (IFA), in cooperation with several organizations, created the VetFran program for franchise companies to offer financial incentives, training and mentoring for veterans interested in starting their own franchise business. As part of this initiative, there is an effort to support "Operation Enduring Opportunity," a campaign to recruit and hire as franchise owners 75,000 veterans and 5,000 wounded warriors.
In addition, there is also the Help Veterans Own Franchising Act (HVOF) that establishes a tax credit for veterans to become franchise owners and allows a tax credit of up to 25 percent of the franchise fee to offset start-up costs. For example, 7-Eleven offers qualified veterans a 20 percent discount off the franchise fee, along with up to 65 percent financing of the franchise fee. Based on the VetFran progress report in 2013 there were 5,192 veteran franchise business owners.
Choosing a franchise is hard enough. Don't do it alone!
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