Funds can be yours (Daily Mail franchise story)
Funds can be yours
Daily Mail
By: Linda Whitney
DON’T let a lack of cash stop you from setting up in business with a franchise. Banks will still consider lending to suitable franchisees.
Cathryn Hayes, head of franchising at HSBC, says: ‘HSBC is definitely open for franchise business. Finance might be available if you show a good understanding of your chosen franchise and the financials of your business.’
Banks prefer lending to people starting up with an established franchise over independent startups, because franchises have a tried-and-tested formula and a verifiable trading history.
The franchise arms of the High Street banks will typically lend 50-70 per cent of the cost of getting started and homes are still being accepted as security. With no security, the banks might suggest you apply for the new Enterprise Finance Guarantee.
‘There is a general perception that banks are not lending, but it’s not true,’ says Karl Sandall of TaxAssist Accountants, the accountancy franchise aimed at small-business clients, which typically requires a total investment of £70,000-£100,000. We have taken on ten new franchisees in the past six months. Almost all borrowed, and none reported any problems about raising money.’
But banks are looking harder at applications, so boost your chances by choosing a franchise well-known to the banks.
McDonald’s restaurants franchises cost £200,000, but banks can lend 75 per cent. Brian Mullens, of McDonald’s, says: ‘In the past three months of 2008, three franchisees started up new McDonald’srestaurants, and all received funding from lenders.’
Mr Mullens puts this down to the company’s strong business performance as well as its longstanding relationship with the banks and its internal check and audit systems for franchisees, which help to reduce business risk.
Ensure that your skills and experience fit the requirements of the business, and be prepared to prove your financial worth. You should also have a cast-iron business plan. If necessary, franchisors can help you with this.
‘We have a dedicated team to help franchisees draw up their plans,’ says Sophie Atkinson, from Autosmart International, the British Franchisor of the Year whose franchisees supply vehicle cleaning products to the trade. ‘We have taken on two new franchisees since November and have another four in the pipeline, and none has had any trouble borrowing to get started.’
The minimum investment in an Autosmart franchise varies from £12,000-£20,000. But just because it’s possible to borrow money does not mean that you should.
‘Before you sign up for a franchise, consider what you can afford and how long it will take you to pay it back,’ says Berkeley Harris, of WPA Healthcare, the health insurance franchise, where investment costs £7,500 plus a returnable £2,500 fidelity bond.
LLOYD STUBBS borrowed money to invest in a franchise withTaxAssist Accountants, which opened in Grantham, Lincolnshire last November.
‘When I approached some of the banks in April 2008, they were all positive, but when I contacted them again with a business plan in September they were more cautious,’ says Lloyd, 44.
He got help from Lloyds TSB’s franchise arm. ‘They worked hard to overcome any problems, and lent me £85,000 after I contributed some savings and put up my house as equity,’ he says.
It helped that he had business experience and is a qualified accountant, and the bank was familiar with TaxAssist Accountants, which is an established franchise.
Lloyd says: ‘It’s clear that banks still need to lend, so if you want to borrow, shop around and persist.’
MAKING YOUR MARK (Daily Mail franchise story)
Daily Mail
IF YOU are an aspiring media mogul, there are plenty of publishing and marketing franchises to choose from.
Most allow you to work from home, but you must be willing to get out and sell in your community.
My Little Wrapper franchisees provide chocolate bars with specially-printed wrappers used as promotional items by businesses, or by individuals for weddings and parties.
You work from home, but should also go out selling the service to companies and at events such as weddings and fairs. Cost is £1,500.
Other franchises run by N5, which launched My Little Wrapper last year, include children’s magazine Raring2Go (£5,000-£15,000),local marketing franchise, Thebestof (£5,000-£25,000), andcommunity magazine franchise My Mag (£3,500).
Franchisees with The Flyer produce a local magazine with news, features and listings, funded by advertisements for local businesses, so you must be literate and outgoing.
Start-up costs are from £5,000.
CLICK HERE FOR DETAILS of more franchises,
TaxAssist Accountants 0800 0188 297, HSBC Bank 0800 234 6224, Autosmart 01543 482 926, WPA 01823 625 120, N5 0121 765 5556, The Flyer 01394 211 461.
