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    2 Replies Latest reply on Mar 23, 2008 2:41 AM by TJMorehead

    What's the best vehicle to fund Franchise fees?

    KCBOBE Newbie
      I'm looking for advice on obtaining capital for an upfront franchise fee. I'm an entrprenuer and enjoy the challenge of startups. I'm currently operating a company I founded in 2002. Prior to founding the company, I was working for a very successful muli-million dollar operation. During my employment, I developed a business concept. Becuase I had very little capital, I took the concept to the owners of the company, both muli-millionaires, and they agreed to fund the business. In return, I was given the opportunity to build a new business concept from the ground up. Having tunnel vision and a tremendous passion to for my idea, I agreed orally to terms with the owners. Mistake #1. Over the years, I created a successful operation and was looking forward to the big payoff. In mid 2007, I was informed that the company I spent eight years of my life building was being sold to a major public company. I disagreed with the timing as the value of the company was increasing by 100% annually. Never the less, the decision was made to dell and I respected their decision. After the decision was made, I spent months going through due dilligence to prepare for the final closing. As part of this process, I was kept out of the meetings where the final buy / sell was negotiated. This really concerned me but I kept telling myself my business partners were true to their word. In the end, because this deal was worked "behind the scenes", and my partners sold the comapany on a four year earn out basis. The reason for this was they worked a deal which could generate substaintially higher returns over a period of time. Here's the kicker. The percenage of the earnout "my partners" offered me was substaintially lower than we initially discussed. I was shocked because these were people I trusted like my own family. I learned a great deal from them over the years and the only person I blame for this is myself. I knew better..I was smarter than that but I ignored my gut and pressed on. Mistake #2. So today, I'm working for a public company and I'm responsible to operate the business which can generate substaintial returns over the four year buy out. I could make a couple million but my partners, based off the four year forecast, can earn in excess of 20 million. I have been operating the company for several months now but my fire is diminishing. Partly because I do not have the control I once had, but more importantly, I have a very hard time working for my old partners based off principle. So, in the end, I have decised to move on and sacrafice everything I have worked so hard to create. When this decsion was made, I started researching various Franchise opportunities. After many hours of research, I have landed on the franchise I would like to pursue. The business plan is sound, the management team is very experienced, and the results have been impressive. The initial fee is $380,000. I was recently divorced and the settlement is not final. Pre-divorce I had $250,000 in my 401K and around $200,000 in home equity. Post divorce I will have half of that. The divorce will be final in April. My credit is very good but there have been a few slow payments as of late beacuse my soon to be ex has not been keeping up on payments, which is her responsability per the divorce decree. So I'm sure there will be a few hiccups over the last few months. Pre-divorce, my credit was above 725. Post-divorce, one can only hope. Please let me know if anyone has a funding vehicle other than the SBA. Sorry for the long post but I felt it was important to explain my reasoning fully.
      Thank you for your help.