Four Tips for Securing Funding for a Franchise

Modified on - Published on

Franchise funding tips

Beginning your franchising journey can be costly, and if your savings aren’t bottomless, you might think the investment amount is going to limit your options. In this article, you’ll discover the available funding options for new franchisees, along with four top tips for securing funding. 


Before you make any moves, make sure you have all the information. Running a franchise takes research, preparation and investment, but it also comes with a huge wealth of support from your franchisor and franchise network. You might be surprised by how much opportunity is out there for you, if you take the time to find it. 

How much do franchise investments cost?

The cost of running your own business within a franchise can vary massively, depending on factors like franchise size, franchise type and franchise location. That said, the average cost of establishing a franchise is £42,000 [British Franchising Association]. 

Franchise funding sources 

The franchising industry is growing. In 2018, the number of people employed in the industry reached 621,000 - an increase of 10% in just ten years [British Franchising Association]. Finding the right franchise financing option is crucial, and there are several different sources to consider, including:

1. A bank loan

Most leading banks are willing to give funding support to franchisees, offering loans which cover 50-70% of start-up costs. Certain key factors will play a role in this process, including whether or not the franchise you’re joining has been successfully vetted, and whether or not you have a poor credit history.

2. The government’s Start-Up Loans Scheme 

This is a government-run scheme in which new business owners will be offered a 6% APR loan, payable over a period of up to five years, that covers 100% of start-up investment costs. Applicants can apply for up to £25,000, though anything above £15,000 will be more challenging to obtain. Applicants can also apply for capital repayment holidays. As is the case with a bank loan, the franchisor will need to have a strong trading record in order for a franchisee’s loan to be approved.

3. Sector-specific opportunities

If you know you’re interested in a specific sector, be sure to look for applicable funding opportunities within that area. If, for example, you’re interested in starting a cleaning franchise, maintenance company Fantastic Services are currently offering up a grant of £1 million to 200 people, enabling them to start a Fantastic Services franchise following job or work loss due to the pandemic. 

Our grant programme has been designed to help those who lost their job, self-employed tradespeople, as well as small businesses within the service industry, which were negatively impacted by the pandemic. The grant covers most of the expenses for starting a working franchise business with Fantastic Services.
—Anton Skarlatov, Fantastic Services CEO and Co-Founder



4. A Franchise Finance loan

In the words of Franchise Finance’s Chris Robert,

“All too often we see access to sufficient finance as a barrier to growth, with franchisees unable to fulfil the potential of existing operations or expand into new locations.”

That’s why, for existing or new franchisees, Franchise Finance has gathered together £50 million to loan out to franchisees in need. Amounts between £5,000 and £500,000 are available to borrow, and the repayment period is up to five years.

We have a 95% success rate in arranging finance for our clients and we’re now in a position to support many more people to achieve their long-term goals.
—Chris Robert, Franchise Finance Business Development Director

Four tips for securing franchise funding 

1. Research your costs 

When looking into how to secure funding to start a franchise, you need to understand the costs associated with investing. Once you find a specific franchise that you’d like to work with, this will be an easier process. Research thoroughly, and know exactly what you’d be getting into. Some costs to look out for include:

  • Franchise package fees 

  • Premises costs

  • Refurbishment costs 

  • Installation of fixtures and fittings

  • Signage 

  • Stock, tools and stationery 

  • Equipment 

  • Licenses

  • Communication costs

  • Marketing, promotional and advertising costs 

  • Vehicle costs

  • Professional fees

  • Insurance 

  • Staffing costs 


2. Create a solid business plan 

When connecting with a lender, you’ll be asked for your business plan straight away. In order to ensure a smooth and successful application process, make sure yours is up-to-date and detailed. For franchisees, this process will be simplified by the blueprints of your franchisor, there for you to follow. Your business plan should include:

  • A summary - An outline of the business, including customer profiles and market competitors.

  • Your details - Your age, your name, your legal marital status and your contact information.

  • Your experience and skills - Think of this section as an abbreviated version of your CV, presented to help the lender understand your skillset and trust in your ability to make your new franchise location a success.

  • Operational costs - Outline the costs for the premises, stock and equipment required to run the business.

  • Operational plan - Explain the staff positions required within the business, and who will fill each of the roles.

  • Marketing plan - Explain your marketing strategy. Often, franchisees will again be following the franchisor blueprint for this step.

  • Financial projections - Include cash flow and profit and loss projections.

  • Amount of loan required - Detail the amount which you would like to borrow.

  • Investment - Detail the amount which you plan to invest in the franchise.

  • Personal finances - Lay out your credit history and any existing debts.

3. Choose a lender 

Choose your lender carefully, and make it, preferably, someone with experience in the world of franchising. Most banks have a dedicated franchise financing department that will be willing to help you. Ensure that, even with an experienced and widely-trusted lender, you carefully read all terms and conditions before signing any agreements, and shop around before making any final decisions. 

4. Prepare in advance to meet your lender

Figuring out how to secure funding for a franchise is all about preparation and research, and so is the process of actually securing it. Before meeting with your lender, ensure that you’re informed, organised, and armed with all the documents you need.

The right opportunity is waiting for you in the franchising industry

Starting a franchise is time-consuming and intense, and figuring out what to do at each step along the way can be difficult, especially for new business owners. As you navigate the franchising industry, it’s reassuring to know that funding is readily available from a range of different sources, and so is support. Explore Point Franchise’s UK franchise directory to discover the huge range of UK franchising opportunities on offer.

These articles may interest you

How to Make a Career Change In Your 50s with Franchising

Making a career change can be daunting at any age, but franchising is a [...]


Q&A: Does the Massage Company Franchise in the UK?

In a busy world, spa experiences offer consumers a break from the hustle [...]


Marketing Your Franchise: How to Advertise Your Business Like a Pro

Franchising can be exciting, rewarding and profitable. But it [...]


Franchisor Tips: Five Reasons to Make Your Franchise a More Sustainable Business

Sustainability is a hot topic right now, and after a period of [...]


VARIOUS TOPICS – TRENDS IN FRANCHISING

Q&A: Does Minster Cleaning Franchise in the UK?

If you’re interested in franchising, the cleaning sector could [...]


CLEANING FRANCHISES

Q&A: Does Krispy Kreme Franchise in the UK?

As a firm favourite among customers since its inception in 1937, and a [...]


FOCUS ON BUSINESS SECTORS
Did you enjoy this article? Please rate this article
Average rating 5.0/5 based on 1 vote
These franchises may interest you
The Alternative Board franchise

The Alternative Board

Profitability For Businesses

The Alternative Board (TAB) is the world’s largest peer-to-peer support and business coaching [...]

Read more ›
Minimum investment
£20,000
Business & B2B Services
Request
information
Crêpeaffaire franchise

Crêpeaffaire

Crêpeaffaire is a unique and independent quality foodbrand, serving freshly baked savoury and sweet [...]

Read more ›
Minimum investment
£130,000 +VAT
Restaurant, Coffee Shop & Pub
Request
information
Really Awesome Coffee franchise

Really Awesome Coffee

The fastest growing mobile coffee franchise in the UK – beat the competition on the high street and [...]

Read more ›
Minimum investment
£6,500
Van Based
Request
information
eDivert franchise

eDivert

Are you looking for a flexible franchise, that can be run either full-time or part-time and started from your desk at home

At eDivert we offer administrative, customer service and marketing services to other businesses.

Read more ›
Minimum investment
£5,400
Business & B2B Services
Request
information
Wolf Education franchise

Wolf Education

Helping great people find great jobs

Wolf Education specialises in the recruitment and selection of all personnel within the education [...]

Read more ›
Minimum investment
£19,950 +VAT
Business & B2B Services
Request
information

0 Comments

Post a comment

Characters remaining: 250