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Re: Anyone experience with financing opening up franchisees?
Anyone experience with financing opening up franchisees??
Talk to the SBA, Talk to SCORE, Both are FREE.
Ask the Franchisee about Financing. How soon do you plan on starting??
Keep up posted with your results. You will also get some great suggestions.
Good luck, LUCKIEST-
Re: Anyone experience with financing opening up franchisees?
I was planning on starting this month or next, we already started the application.
we need to take a test and so on.-
Re: Anyone experience with financing opening up franchisees?
Experience with financing opening up franchisees??
Keep us posted after the test.
Where are you??-
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Re: Anyone experience with financing opening up franchisees?
If I were you I would drive around and ask some other subway franchise owners how they financed their business and what they would recommend you do. I'd also be surprised if subway did not have a decent option that they can facilitate you applying for.
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Re: Anyone experience with financing opening up franchisees?
I was a subway franchisee for about 10years and director of oporations for a subway development officer for about eight years before that. At least in my area, many franchisees will carry contracts. Most of them would like 25% to 50% down, they will ask for collateral, possibly a higher interest rate than what you will pay at the bank, but you can be more creative and many of them will be more flexable with terms. As an example, you may be able to structure the loan so that it is amortized over 15 years with a balloon pmt. at ten. This will give you lower monthly payments to keep cash flow up while you're getting started and by the time you have been in business for 10 years, it is easy to go to a bank and finance the payoff.
I hope this is helpful.-
Re: Anyone experience with financing opening up franchisees?
Thanks guys for all the details.
Bank of Amerrica turn us down because the financial specialist was not very experience, she said there was no sba loans available, but their website clearly state it does. So we spoke to a manager and she told us she would filed it, however, we should finish the process with subway and get approve.
Then there'll be a greater chance of us getting the loan. I will be speaking with subway owners just to get their opinions on what is good or what could be bad.
Usually, through sba loans, do they ask for deposit or collateral?-
Re: Anyone experience with financing opening up franchisees?
"through sba loans, do they ask for deposit or collateral?"'
Oh yes. Absolutely. As Hyland stated, you'll need to provide about 25% of the total investment. Lenders want the borrower to have have stake in the business, skin in the game, if you will.As far as collateral, SBA claims not to require it, but it is much harder to qualify. I expect you would need to provide a great portion of the investment.-
Re: Anyone experience with financing opening up franchisees?
I thought hyland was talking about franchisee financing where their rates are higher.
I was reading through some threads and sba loans, people were depositting like 10% .
I might put my car for collateral and deposit 10%, hopefully thats enough.-
Re: Anyone experience with financing opening up franchisees?
Andy,
Autos do not work as collateral. Generally only real estate, and liquid investment accounts, and cash, of course.
I am guessing you have not had any conversations with Subway as they would qualify you as a potential franchisee.They will want to know how much cash you have and what your net worth is.-
Re: Anyone experience with financing opening up franchisees?
Lets say I have the real state as collateral and my net worth qualifies me for the franchise.
What happens to that collateral? What if I failed, whats going to happen to it?
Sorry, I just want to get a lot of information before I devour myself into something that's going to invest a lot of my time and assets.-
Re: Anyone experience with financing opening up franchisees?
hey Piper,
I gave you a call to get some information. -
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Re: Anyone experience with financing opening up franchisees?
Hi Andy,
I was talking about the franchisees, at least in the North West they are carrying the contracts on their own stores. It has helped them be able to sell in a more timely manner, because without a lot of restaurant experience or cash, it has been hard for many potential buyers to get financed through a bank or SBA. When you purchase from the Subway owner, they get cash down, a monthly income and they make the money on the interest, which as I said before is usually a little higher than the bank. For many owners it has worked out well. Instead of collateral, we structured notes so that the seller would remain on the franchise until a certain percentage (like half) has been paid off. That would mean you would pay the fee to be added to the franchise and then another fee when the terms of the agreement were met to have the seller removed. It is kind of like a for sale by owner house where the seller carries the note. If you go this way, make sure you have a good attorney write the sales agreement.
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