Franchising Today - Winter 2017 - 11

FINANCING GROWTH

return on invested capital and compare that to the expected cost of that
capital along with other metrics. That
should be compared to investment
opportunities outside of their business, and should also tie into the owner's personal financial goals. Then
that individual can make the most informed decision as to what is the best
use of their own capital.

additional equity investment
Business-owners typically do not
want to give up equity in their businesses unless they are looking to completely sell and walk away. Also, due
to franchise contracts, bringing in
outside investors can become a cumbersome process, if allowed at all. We
find this to be the least utilized source
of growth funding in our experience,
and usually for good reason.
Franchisees have much to consider when it comes to how to fund the
growth opportunities available to
them. The good news is there is an
abundance of resources available to

The largest portion of an owner's net
worth is tied to their company, so it might
make sense to diversify cash flow.

that work specifically with franchise
owners on their growth plans to understand goals and help identify the
correct products. Some franchise
model companies also have longstanding relationships with major
bank partners, who have created exclusive lending programs. Whether
choosing a local partner or an online
alternative, it is important for franchisees to weigh their options and
each of their intricacies when looking
at debt financing.

Retaining Cash Flow/PRoFits
Franchisees in a position where retained earnings from business operations alone can fund growth have the
largest variety of financing options
available to them. These are typical-

WORK WITH YOUR PARTNERS AND ADVISORS TO DETERMINE THE RAMIFICATIONS.
ly well-established business owners
and attractive prospects for commercial lenders. Although many business
owners in this position would prefer
not to involve a financial institution,
it is critical they consider the advantages of this funding.
Typically when looking at personal
net worth, by far the largest portion of
a business owner's net worth is tied to
their company. In that consideration,
it sometimes makes sense to diversify
cash flow away from the business into
other investments. Owners should
work with their business advisors to
look at factors such as their internal

help in the process. It is critical to
work with your partners and advisors
to determine the ramifications of each
potential financing source. It is also
important to consider not only your
business, but your personal financial
situation in making that decision.
Cramer Soebbing is a wealth advisor at

Mariner Wealth Advisors' Chicago office.
This commentary is limited to the dissemination of general information pertaining to
Mariner Wealth Advisors (MWA) LLC investment advisory services and general economic market conditions.
The information contained herein is not intended to be
personal legal, investment or tax advice or a solicitation
to buy or sell any security or engage in a particular
investment strategy.
WINTER 2017

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Table of Contents for the Digital Edition of Franchising Today - Winter 2017

Contents
Franchising Today - Winter 2017 - Cover1
Franchising Today - Winter 2017 - Cover2
Franchising Today - Winter 2017 - 1
Franchising Today - Winter 2017 - Contents
Franchising Today - Winter 2017 - 3
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