Conditions of loan for franchise business

What are Conditions of loan for franchise business?  Lately many lenders started to demand a higher degree of background information before offering franchise loans, and commercial finance in general. Typically, a Franchisee will need to provide lenders with a significant amount of supporting documentation to be considered for franchise finance. Each Franchisor will have developed a legal pack which provides potential franchisees with all of the information necessary for them to make a professional assessment of the business opportunity. Contained in the pack will be a history of the company, sales projections, technical and training requirements, and any other information deemed necessary to the franchisor. The pack will also hold details of any ongoing charges levied on the franchisee for use of the corporate brand. Lenders will want to see this information pack before offering franchise loans for the purchase of the business, or in some cases, the commercial premises.

loan_mortgage (3)What are the other conditions of loan for franchise business? Of course business plans will be requested as well. There are many sample documents available on the web and from most High Street lenders. When developing a business plan, it is important to look at the business objectively, and of course, realistically. The plan will be scrutinised and so, its important to ensure that the data in your plan is realistic and credible. If the franchise requires commercial premises the franchisee may wish to explore purchasing this outright. Whilst it is not often mandated that the franchise owns the premises, in certain circumstances, and for certain businesses this may be preferable.

Is the property/location suitable for the type of business
Does it offer sufficient room for expansion
Is it easy to access for clients and suppliers
Is it within budget – when all other business costs are included

Purchasing Premises

Franchisees looking to explore this option should research the local market for suitable properties. Both self-certified and status based commercial mortgages are available to franchisees buying their premises.

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