Don’t Make These Blunders When Financing A Canadian Franchise . Franchising In Canada … Done Right!

A blunder. We're told it's about ' acting blindly ‘... ‘without guidance'. Can you actually afford to make a blunder when it comes to financing a Canadian Franchise? Talk about a costly mistake.

Let’s examine some ways in which you can avoid making those serious mistakes when looking at franchising in Canada and the financing needed to complete that purchase. And by the way that includes buying a resale franchise, or of course a new ' turnkey ' operation.

It goes without saying that you need to do your homework in order to ensure that Murphy's Law doesnt kick in... ‘What can go wrong ... will '. We're also often asked if there is a difference in working with a Canadian franchisor as opposed to a U.S. founded organization. We certainly don't think so... and the reality is you may well be dealing with a Canadian master franchisee anyway. That's of course a Canadian or Canadian organization who has secured the U.S. rights for Canada.

Identifying the right amount of capital required for your business franchise is critical. That of course involves the initial franchise fee, as well as the amount then required to facilitate the entire purchase. That might include equipment, leaseholds, inventory, etc.

It's at this time that many potential Canadian franchisees make their first ' blunder ‘. They forget to consider longer term working capital. That’s the funds required to run their business on a daily basis, re operating costs. Remember that your business can't grow without a proper base of working capital.

And coming back to our debt and equity scenario, spend some time understanding how the right mix of personal investment and debt plays out relative to leverage, risk, depletion of personal resources, etc.

There is a danger in making a sizable non refundable deposit if in fact you are ultimately unable to complete financing for your Canadian franchise. And talk about a sinking feeling if you complete a transaction and ultimately find you are not suited to the nature of the business with respect to the personal satisfaction that comes from creating and growing your own business.

There is probably no better ' homework ' when it comes to a Canadian franchise opportunity than talking to other franchisees within the system you are considering - they might also provide valuable insights into how they financed their franchise and what obstacles you might need to overcome .

We're not so sure you can call it a blunder, but it's certainly an over expectation if you think your franchisor will provide or significantly help you with the financing of your purchase. In fact you might be surprised that it’s the federal government, via the CSBF program that in fact finances thousands of franchises in Canada. Avoiding blunders in making that program successful for yourself is a whole other subject.

Avoid those blunders we're talking about when assessing your options in franchising in Canada when it comes to selection and finance of your business.

Consider also speaking to a good franchise lawyer, accountant or Canadian business financing advisor who can assist you in eliminating costly mistakes and enhancing chances for success.