Franchising Today - Fall 2016 - 14

Column by Richard Henderson

It is important not to over-leverage by
growing too fast or refinance too often
as costs accumulate.

SMART FINANCING
franchisees should follow a checklist of important
issues to help answer questions about financing.

OBTAINING
IS Aof importObtaining financing FINANCING
is a must
The following checklist
for most franchise owners. With the
range of expenditures a franchise
incurs, supporting it from cash flow
alone is not feasible, nor is it financially desirable. When opening a
franchise, making financing decisions requires careful assessment of
your financial, operational and other
situational needs. There are a lot of
variables involved and questions to
be addressed. What kind of financing
is available? How much should be financed? What should you expect from
a financing provider?
14

franchising-today.com

FALL 2016

ant issues will help answer the questions involved when making financing
decisions for your franchise.
Types of financing available. Franchisees are regularly finding themselves
making expenditures such as upgrading equipment or technology, remodeling or acquiring new locations. In
addition to more traditional equipment financing to meet these capital
needs, franchisees will find financing
available for working capital, acquisitions, remodels, new builds, refinancing and partner buyouts.

Amount of financing to incur. Currently, lenders are so eager to lend
that they have relaxed underwriting standards, perhaps too much. As
we've seen before, it may not be prudent to make the loans some are making. More importantly, it may not be
in the franchisee's interest to accept
some of the aggressive debt offers
they are receiving in this hyper-competitive lending environment.
However, there is a happy medium to keep a company's growth and
financial management in balance. It
is important not to over-leverage by
growing too fast or refinance too often as costs accumulate, but growing
without debt can put undue burdens
on capital, too. When vetting a potential lender, pay particular attention to
its recommendations for how much
debt you should use for your business,
and spend some time really consider-


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Table of Contents for the Digital Edition of Franchising Today - Fall 2016

Contents
Franchising Today - Fall 2016 - Cover1
Franchising Today - Fall 2016 - Cover2
Franchising Today - Fall 2016 - 1
Franchising Today - Fall 2016 - Contents
Franchising Today - Fall 2016 - 3
Franchising Today - Fall 2016 - 4
Franchising Today - Fall 2016 - 5
Franchising Today - Fall 2016 - 6
Franchising Today - Fall 2016 - 7
Franchising Today - Fall 2016 - 8
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Franchising Today - Fall 2016 - 10
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Franchising Today - Fall 2016 - 14
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Franchising Today - Fall 2016 - 38
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Franchising Today - Fall 2016 - 40
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Franchising Today - Fall 2016 - 49
Franchising Today - Fall 2016 - 50
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Franchising Today - Fall 2016 - Cover3
Franchising Today - Fall 2016 - Cover4
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