Franchising is the licensing of an existing business model and brand, where a business owner is given the right to market the trademark of an existing business in exchange for fees and a percentage of the business’ profits. Franchises are a pervasive way to do business now. Companies selling the rights to their name or logo to third-party retail outlets is so familiar that its hard to drive down the block of any city and not see a franchising business. Some examples of well-known franchises included Subway, UPS, and H & R Block. Still, there are methods most should follow today—as a potential investor or owner—to sustain and have long-term success. These trends include an increase in technology, specific age group influence, and fast-food restaurants and practices that are changing the franchising industry and taking it to new territories.
If you have a newer franchise or need capital ASAP, OnDeck (see our review) is one of the easiest and quickest ways to get a short-term loan or line of credit. Though OnDeck isn’t specifically geared toward franchise owners, it’s a viable online loan option for any type of small business owner that doesn’t qualify for a bank loan or doesn’t want to wait months to receive loan funds. OnDeck also recently partnered with the Franchise Council of Australia in an effort to better serve the global franchise market (fun fact: Australia actually has more franchise outlets per capita than America).
After all, small-business loans can help you get from A to B, providing vital capital to jumpstart your business expansion. Yet these loans are also notoriously difficult to get; and, should anything go south with your business, you may lose the collateral you put up for the loan. What's more, to qualify for most bank loans, your company will need to have been in business for at least one to two years and meet annual revenue requirements -- to name just some of the criteria required.
Personal collateral requirements depend on the loan amount and the project. Does the coffee franchise involve commercial real estate or will the business be leasing a space? Collateral can be in different forms. Real estate equity is one form of collateral. Cash (in the form of a payment reserve or a CD) is another. We would need to know the specific project cost breakdown to know what might be possible. Rule of thumb would be to plan on 25% personal equity into the business and the bank will finance 75%. If it is preferred to avoid putting a lien on personal real estate, plan to have 18 months of loan payments to set aside in an escrow account at the bank as a payment reserve. The payment reserve can be released back to you after 2 years, as long as the business is showing good cash flow and making the loan payments without a problem. The other option is a CD held at the bank for the term of the loan. The CD is usually a smaller amount of funds than the payment reserve but is held for the entire term of the loan.
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The staff at Key Commercial Capital was wonderful. They made sure to explain all our options in detail and were always interested in the best for us. They verified our documents before submitting for approval to ensure everything was in order and that the application and closing process was as smooth as possible. They were also very responsive and available at all times. I will certainly be back on the next opportunity.
Trade Secrets. Trade secrets can be a great asset for startups. They are cost effective and last for as long as the trade secret maintains its confidential status and derives value through its secrecy. A trade secret right allows the owner of the right to take action against anyone who breaches an agreement or confidential relationship, or who steals or uses other improper means to obtain secret information. Trade secrets can range from computer programs to customer lists to the formula for Coca-Cola.
Sometimes it makes sense to tap 401(k), Individual Retirement Account or other retirement funds rather than seek a loan. But rather than just taking an early withdrawal, which may be subject to taxation, you may want to consider setting up a C corporation that will own and operate the business. Then roll over money from your self-directed retirement account into that corporation’s profit-sharing plan and direct that those funds be invested into the franchised business. But this is a risky option: If the franchise fails, your retirement fund can be wiped out. Check with a professional on possible tax implications, and consider the tradeoffs carefully.
The challenge is even greater for franchise owners looking to open new locations. They must pay a “franchise fee” amounting to tens of thousands of dollars, and the aforementioned deductions begin as soon as the new location opens its doors. Combine these expenses with inevitabilities like new equipment or furniture and you can see why business loans are popular for franchises. Multiple large expenses can easily pile up at the same time, making it extremely difficult to raise profits or save money.
We have successfully provided franchise loans and restaurant financing to such recognizable and far-reaching brands (but not limited to) as Subway, CiCi’s Pizza, Meineke Car Care Center, Golden Crust, Golden Corral, Firehouse Subs, Kentucky Fried Chicken, Domino’s Pizza, IHOP, Burger King, Jack in the Box and Quizno’s, to name a few! Let’s continue the success story that your long hours and hard work have brought about and take your business to the next level!
If you own an existing franchise and are looking for working capital financing, then you’ll likely have even more options than you had when you started your business. These loans can be used to fund any business activity, such as to make payroll or to make equipment purchases. The table below shows some of the best options for working capital franchise financing and who each might be a good fit for.
At some point nearly every franchise will seek a loan or working capital. Knowing your franchise financing options can be the difference between thousands of dollars saved or lost. If you are a franchise business owner seeking financing and need help understanding the options, please reach-out to one of our funding specialists and we’ll help you navigate the process.

Starting any business has a price, so you need to determine how you're going to cover those costs. Do you have the means to fund your startup, or will you need to borrow money? If you're planning to leave your current job to focus on your business, do you have some money put away to support yourself until you start making a profit? Find out how much you're going to need.
We make money when you get the funding you need. Some of the loan providers on our site pay us a referral fee when customers get approved for a loan. We always try to find the best option for you, even if we don’t have a paying relationship with a lender. We also turn down offers from lenders that we feel take advantage of small-business owners. Read more about how we make money.
For existing franchises looking for working capital, another form of alternative financing comes from monetizing the franchise’s balance sheet to obtain funding. Using the franchise’s commercial real estate, or by tapping into the franchise owner’s personal real estate, an asset based lender can collateralize the real estate and provide working capital up to 90% of the real estate’s equity.
We make money when you get the funding you need. Some of the loan providers on our site pay us a referral fee when customers get approved for a loan. We always try to find the best option for you, even if we don’t have a paying relationship with a lender. We also turn down offers from lenders that we feel take advantage of small-business owners. Read more about how we make money.

After all, small-business loans can help you get from A to B, providing vital capital to jumpstart your business expansion. Yet these loans are also notoriously difficult to get; and, should anything go south with your business, you may lose the collateral you put up for the loan. What's more, to qualify for most bank loans, your company will need to have been in business for at least one to two years and meet annual revenue requirements -- to name just some of the criteria required.
If you start your company with co-founders, you should agree early on about the details of your business relationship. Not doing so can potentially cause significant legal problems down the road (a good example of this is the infamous Zuckerberg/Winklevoss Facebook litigation). In a way, think of the founder agreement as a form of “pre-nuptial agreement.” Here are the key deal terms your written founder agreement needs to address:
Your first option is to change your business model to demand fewer needs as listed above. For example, if you were planning on starting a company as a consultant or freelancer, you could reduce your “employee” expenses by being the sole employee at the start. Unless you need office space, you can work from home. You can even do your homework to find cheaper sources of supplies, or cut out entire product lines that are too expensive to produce at the outset.
Most lenders will contact a credit bureau to look at your credit file. We suggest you do the same thing before you try to borrow. Under the law, credit bureaus are required to give you all the information they have on file about your credit history. Once you have this tool, you should correct any wrong information or at least make sure your side of the story is on record. For instance, a 90-day delinquency would look bad, but if that 90-day delinquency was caused by being laid off or by illness, then that should be taken into consideration.
Crowdfunding financing companies are platforms that raise money from both institutions and individuals, and they often lend it out to specific industries. Some focus on real estate, while others will focus specifically on small businesses or franchises. They typically bridge the gap between traditional business loans, like SBA loans, and alternative loans with much higher costs.
Eligible funds received through this program can be used for business conversion, repair or enlargement; the purchase and development of land or buildings; the purchase of equipment; debt refinancing as long as new jobs will be created as a result; and/or business and industrial acquisitions when the loan will save and/or create jobs and/or the loan will keep the business open.
After you register your business, you may need to get an employer identification number (EIN) from the IRS. While this is not required for sole proprietorships with no employees, you may want to apply for one anyway to keep your personal and business taxes separate, or simply to save yourself the trouble later on if you decide to hire someone else. The IRS has provided a checklist to determine whether you will require an EIN to run your business. If you do need an EIN, you can register online for free.

One noticeable trend in most businesses of all kinds today is technology. Workers and business owners cannot deny how it has influenced and advanced the world of commerce. In particular, technology has made it easier for franchises as they need sophisticated systems to manage the complexity of their trade. By their size, even the smaller franchises require this approach. Thus the most significant concept observed among franchises is software that is not installed on a computer, but instead consists of the web. The point of this approach is to take all the software programs usually equipped with a company’s personal computers and move them to the internet. There, they are presented in a single and secured environment accessible from any Internet-connected device, be it a tablet, computer, or phone. Examples of this development can be found with software solutions such as Nextstep Systems, Hello Scheduling, VST Inc, and Steller Restaurant Solutions to name a few. Still, internationalization of franchises continues to be a strong trend within the industry. Many countries are always willing to pay large amounts of money to use western trademarks along with the training and knowledge that come with the territory.  Over 400 franchises are operating internationally, proving to be a thriving option. Furthermore, the Franchise Trade Commission also facilitates business deals for American companies abroad confirming the demand for an American disposition.

ApplePie currently has partnerships with 42 franchises, such as 7 Eleven, Dunkin’ Donuts, Jimmy John’s Pizza, and Wetzel’s Pretzels. Other franchise brands can get loans through ApplePie, though the process might take a little longer. ApplePie offers loans for both new and existing franchises, including franchise startup loans, loans to purchase an existing franchise, franchise equipment loans, franchise refinancing loans, and more.
No business lender is perfect. A lot of them try (and get pretty close) but sometimes, the biggest advantages can lead to polarizing disadvantages. Take OnDeck Capital, for instance. This online business lender is widely-praised by all kinds of small business owners, and rightfully so. OnDeck’s application requires minimal paperwork, you can get funded in […]
Lenders prefer financial statements that have been audited by a certified public accountant (CPA). But many small businesses don’t want to incur the costs of an audit, so one alternative is to have the financial statements “reviewed” by a CPA (which is cheaper and faster). However, some lenders may not require either audited or reviewed statements.
Oral agreements often lead to misunderstandings. If you plan to hire a prospective employee, use a carefully drafted offer letter, which the employee should be encouraged to review carefully before signing. For senior executives, a more detailed employment agreement often makes sense. A good offer letter or employment agreement will address the following key items:
It's now possible to reach people (customers, clients, subscribers, etc.) based on shared ideals and values. Microbusinesses of one sort or another have been around since the beginning of commerce, but the ease of connecting with people is a new phenomenon. Also, a large percentage of the population is being comfortable with making purchases online. These things create a perfect storm of economic convergence. It's never been easier.
While many business experts believe that you should get into a business you are passionate about, it is important that you consider the market’s demand as well as your target demographics. You can’t start a business about something you love and expect people to patronize your services or your products on the get go. The success of a franchise hinges on a lot of factors, but demand and the target market should top your list.
Offering medium-term installment loans with repayment periods as long as 5 years, Funding Circle is a lending partner for established franchisees with a strong credit history. Specifically, you’ll need to be a franchisee with a business at least two years old and have a credit score of at least 620. For qualified applicants, Funding Circle has the advantages of offering faster funding than a bank loan would, as well as offering relatively low rates and fees.

Your answer needs to be more detailed than simply “I don’t have any money.” What specifically will you be using the loan for? Start up? Day-to-day management? As a safety net? To answer this question, you will need to spend a lot of time figuring out your budget along with the amount of money that you realistically can put up as capital. Take your time with this step since it will have a big impact on whether or not you actually get a loan that can cover your expenses.
Richard D. Harroch is a Managing Director and Global Head of M&A at VantagePoint Capital Partners, a large venture capital fund in the San Francisco area. His focus is on Internet, digital media, and software companies, and he was the founder of several Internet companies. His articles have appeared online in Forbes, Fortune, MSN, Yahoo, FoxBusiness, and AllBusiness.com. Richard is the author of several books on startups and, co-author of Poker for Dummies and Mergers and Acquisitions of Privately Held Companies (Bloomberg), and a Wall Street Journal-bestselling book on small business. He was also a corporate and M&A partner at the law firm of Orrick, Herrington & Sutcliffe, with experience in startups, mergers and acquisitions, and venture capital. He has been involved in over 200 M&A transactions and 250 startup financings. He can be reached through LinkedIn.

This option is less likely to work out for those with bad credit because traditional lenders have limits on who they will finance. That said, it isn’t impossible. Your interest rate will however be higher than a standard rate and more collateral will probably be required of you than a traditional recipient. If you think you may still qualify, take a look at some of the loan options offered by the SBA.

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