Franchise Financing: 8 Ways to Fund Your Franchise
A franchise offers a proven path to business ownership with a recognized brand, training, and ongoing support. While it can jumpstart business ownership, opening a franchise requires an initial investment and working capital. Discover more about effective strategies for franchise financing to start your entrepreneurial journey.
The cost to debut a franchise varies depending on the business, industry, and location. You’ll have to pay a franchise fee, an upfront, one-time payment required for the right to operate a company under the franchisor’s brand, system, and business model. This fee grants access to the franchise's trademarks, training, and support.
Franchise fees range from as low as $20,000 to more than $50,000. Restaurants, retail, and other brands with a large footprint have higher franchise fees. In comparison, the franchise fee for mobile or owner-operator businesses is typically lower.
Types of Franchise Financing
Before you move forward with a franchise investment, it’s crucial to understand the financial aspects of launching a business. Let’s analyze the pros and cons of eight types of franchise financing options:
|
Type of Financing |
What is it? |
Pros |
Cons |
|
1. Traditional bank loan |
A loan from a bank. You need strong credit, collateral, and a solid business plan. |
Competitive interest rates, structured repayment terms, and higher loan amounts. |
Strict eligibility requirements, long approval process, and may require personal guarantees. |
|
2. Online loan |
Loans from online lenders. |
Quick approval, flexible terms, and less stringent credit requirements. |
Higher interest rates and fees. |
|
3. SBA loan |
Government-backed loan that reduces the risk for lenders. |
Low interest rates, longer repayment terms, and smaller down payments. |
Lengthy application process and strict qualification requirements. |
|
Access to retirement savings without taking on debt or paying early withdrawal penalties. |
No debt or interest payments and full control of funds. |
Risking retirement savings if the business fails. |
|
|
5. Investors |
Funding from investors in exchange for a share of the profits. |
No debt or loan repayments. |
You may lose full ownership rights. |
|
6. Self-funding |
Using personal savings, home equity, or selling personal assets for funding. |
Full ownership. |
High personal financial risk and limited available capital. |
|
7. Friends and family |
Borrowing money from family members or close friends, either as a loan or an investment. |
Flexible terms |
Risk of damaging relationships if the business struggles. |
|
8. In-house financing |
Direct financing from franchisors. |
Easier approval and lower interest rates |
Limited to certain franchisors. |
Concrete Craft: A Low-Cost Franchise Opportunity
Concrete Craft is one of the largest decorative concrete franchises. We provide homeowners and businesses with a high-quality decorative finish at a fraction of the cost of stone, brick, tile, pavement, or wood. Our finished product looks authentic.
We’re a low-cost, high-margin franchise opportunity for entrepreneurs. Our business model allows franchisees to do business from a home office to lower operating costs. Territories start at 100,000 prospective households.
When launching a franchise, it’s smart to choose one with the backing of an industry leader . Concrete Craft is part of Home Franchise Concepts, the franchisor of ten home services brands with 2,600 territories. Home Franchise Concepts’ support enables Concrete Craft to offer in-house financing to streamline the funding process.
In addition, Concrete Craft is listed in the U.S. Small Business Administration’s SBA Franchise Directory. This enables you to obtain an SBA loan. We have experience helping new business owners navigate the SBA loan application process and other financing opportunities.
Craft a New Future
To explore franchise funding options and learn more about Concrete Craft, submit a franchise inquiry form, and we’ll connect you with an expert from our team.