How To Finance Another Franchise Location
Franchise investments are lucrative for those who have the capital to pay for all the startup costs, but they take a lot of money to get off the ground. Between license fees, advertising, supplies, equipment, and staff, you need to be able to fund a second location through its startup period while managing the cash flow needs of your original storefront. The solution is often the same one you probably relied on when you had to launch that first franchise operation. Franchise financing is built with your needs in mind, providing working capital that allows you to get your business rolling without relying on cash the current location depends on for its operations.
What Makes a Franchise Loan Different?
Most long-term financing is built around the acquisition of an asset, like property or a vehicle. Franchise loans are built more like working capital loans, though. They allow you to put the money where it needs to go, setting yourself up with all the supplies you need to make your customers happy from day one. Marketing is part of what makes this form of investment attractive, since established brands bring their own built-in audience. To fully leverage that, you need to be able to get the word out locally, so people know they’ve got a location opening nearby. It’s easier to afford those higher-tier marketing packages when you’re fully funded with flexible capital, and easier to make sure you’re staffed up for opening day too.
Collateral for Franchise Financing
There are a variety of ways to structure your new franchise loan, but one easy option that allows you to control the cost of the capital is by using the equity in your existing equipment or property. That way, you can access capital needed to cover the new investment without even touching the regular cash flow through your business. It’s a lot easier to budget for stable monthly purchases, and the equity in your current assets can keep interest rates low. With the right financing company, you can even opt to create equity-based credit lines so you can expand even faster as your income grows.
Scale Your Operation
Once you’ve expanded to a second location and established an income stream, it gets easier to find the extra capital you need to go for more. Every new addition represents a smaller portion of your total portfolio, making it a smaller risk. It all starts with the successful expansion into your second storefront, though. Franchise financing is the accessible way to help yourself cover those costs while you run your existing business.