NAB Industry Solutions Executive Darryn McAuliffe shares essential finance tips for entering the franchising industry.
Making the right decision to buy a franchise business is one thing. Having the working capital to do it is another. According to NAB Industry Solutions Executive Darryn McAuliffe, however, the process for securing finances isn't the nightmare it may seem. It should be as simple as an initial phone call to schedule an appointment with a specialised franchise banker.
"Difficulty finding an initial contact point should be a warning sign," says McAuliffe. "These banker contact details can generally be obtained through the bank's website, from information booths at industry events or information held by the franchisor and other key industry bodies like the Franchise Council of Australia."
Once potential franchise owners are comfortable that they are well suited to the franchising business model and have a clear understanding of the franchise brand they're considering, a "good degree of research and self-education" is required before their bank appointment.
"A well prepared applicant will generally bring with them a business plan, budgets (profit and cash flow-based) and full details of their personal financial position, including any security that may be available."
This information enables a prospective lender to determine a potential franchise owner's personal borrowing capacity based on repayment ability and what franchise options are within their price range. For people new to franchising and small business operations, invaluable support for helping to obtain this information is provided for free at industry expos and from government departments.
"Specialist bankers will often be in attendance at industry events and will also be well known to the franchisor. From here, an initial contact can be made where the bank can provide some broad guidelines on their involvement in the franchising sector and comfort around their expertise in dealing with these types of businesses."
And just like finding the right franchise business, it's a smart idea for potential franchise owners to compare a cross-section of bank offerings to ensure the best possible choice is made.
"Many applicants like to engage and screen more than one finance provider to compare pricing, terms, conditions and to assess who can best meet their requirements. It makes sense to keep options open early in the process as confidence is being built around the structure and an ability of the bank to complete the transaction."
The NAB Finance Advice Stand will be providing invaluable support at the upcoming Melbourne Franchising and Business Opportunities Expos. Register for your free tickets and then head to the Franchising Advice Centre Information Point when you first arrive at the Expo to book in for your free appointment.
By Michelle Wilding
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