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  • #965737
    Nikkistar
    Member

    Hello,
    A friend of mine and myself are currently going through teh worls of opening a franchise in Townsville.
    Currently this franchise has not made it way to Towsnville and there is nothing comparable to it within the Townsville region. we both feel that this will work to our advantage in the long term success of the business.
    We have found a location that fits well with our propossed time line to get things off the ground.
    All we need now is the funding!
    I am hoping someone may be able to offer some advice in this field.
    The startup costs are anywhere between $150,000 to $225,000 depending on teh size of teh lease location – in our instance the site that we have looked into will mean that we would be looking at approximatley $170,000. This is 100% of th startup costs.
    My partner owns her own home but unfortunately i have not entered the market yet. Essentially i would prefer that her home is not used as security seens as though i have nothing in comparison to offer and (thinking straightly) if things go wrong this would compromise her home that her children live in. I do not forsee this happening but it needs to be considered.
    Another little hickup on the lines of things is that i have a small default on my credit rating – $230 – which in about a years time will come off (but that doesn’t help me now) THis was from a small utilities bill that was not paid and forgotten about many years ago when i was a carefree early twenties girl! Something i have regretted everyday sicne finding out i forgot to pay it and that i have a mark on my rating. I understand that this limits things, but i am much older now, have my own family and having considered my dramas in the past trying to secure private loans for my family life would not be so stupid in the future

    I would like to know what our options are, i believe from researching online we would be looking at an unsecured loan – or can a loan be secured against the business. I have alos looked into investors but we would alos prefer to use that an a last resort option so that we may retain complete control over the business and profits.
    This is a nationally known franachise and is currently successful in all states.

    I would appreciate any advice you may have to offer adn thank you in advance.

    #1013751

    Hi,

    I think in the current market you have almost no chance at all of getting an unsecured loan.
    Most lenders will not lend against a business either if you are not purchasing the premises.
    The banks will want some sort of security, and I think they will be looking at your friends home as a guarantee.
    I think you should talk to a finance broker to get some sort of idea as to where you stand and what is possible.
    You can talk to the broker that I use if you like (and no, I dont get a commission!! ha ha) he is in QLD and understands business finance very well.
    Can get his details at http://www.directcredit.com.au the guy you want to speak to is Derek Green.
    Hope this helps!

    Cheers,

    #1013752
    Richard A
    Member

    A good idea would be to speak with the head franchisor, as they have probably had other franchisees who have had to finance and they should be able to recommend a bank that understands their franchise model. I understand that many franchisors align themselves with a financier who has taken the time to learn their business model.

    Alternatively, you could always approach the franchisor to fund you, particularly if they are looking for market presence in your area! There are a million ways you could cut this, but I would suggest maybe approaching them with funding plan showing a buy out of the loan by you in years 3 or 5 at a premium multiple. You may be lucky and get this unsecured, but I cant see it happening.

    Richard

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