Do you want to own your own business? A franchise can be a great place to start. A franchise gives you a proven business model that has been replicated across markets. Like any business, though, you’ll need funding to start a franchise. When considering franchise ownership, understanding the ins and outs of franchise financing is crucial. Figuring out financing can seem like a daunting task, but with these tips, securing financing can be a manageable and rewarding process.
Understanding the Financing
When you sign on the line for a franchise, you are buying a business with the rights to use the franchisor’s information, format, name, and brand. The cost of this can range widely depending on the franchise, which is why many franchise owners turn to financing options to help get their dreams off the ground. Franchise financing is the process of acquiring financial support to cover the initial costs of starting a franchise and even some franchising fees. These costs can include franchising fees, startup costs, and more. Knowing how to navigate financing as a new franchise owner is essential in turning your business dreams into reality.
Franchising Fees: Initial and Ongoing
Franchises have initial and ongoing fees that business owners may need financial assistance covering. An initial franchise fee can be one of the more expensive costs of starting a franchise. According to the International Franchise Professionals Group, the franchise fee is typically a one-time fee the franchisee pays to essentially enter the franchisor’s system and begin using their logo, name, business model, and more. For a CareBuilders at Home franchise, the franchise fee is $49,500. It’s important to note that startup costs like real estate purchases or licensing are not included in this fee.
After the initial investment, franchise owners are typically required to pay ongoing royalty fees. These fees, often a percentage of gross sales, cover the continuous support and education provided by the franchisor. CareBuilders at Home uses these fees to offer comprehensive back-office assistance, including handling payroll, taxes, billing, and collections, allowing franchise owners to focus on sales and client service.
Options for Franchise Financing
Now that you know about some of the fees, let’s look into some ways you can get franchise funding. Some owners may use one or more of these options to finance their franchises. It’s important to do your own research into financing options and speak to a financial advisor about what may be available to you.
- Traditional bank loans: Banks and credit unions offer loans for franchise financing. These institutions typically require a detailed business plan, a good credit score, and sometimes collateral.
- SBA loans: The Small Business Administration (SBA) provides loans to small business owners and franchise owners. There are three types of SBA loans: 7(a) loans, 504 loans, and microloans. It’s important to do your own research into the type of loan that would work best with your financial situation.
- Franchisor financing: Some franchisors offer financing options directly to qualified franchisees. This can include reduced franchising fees, assistance with startup costs, discounts for veterans and other groups, or partial financing.
- Crowdfunding: Raising capital online through the collective effort of a large number of people. Crowdfunding platforms like Kickstarter or GoFundMe let people or businesses create a campaign to appeal for small contributions from a large audience.
- Friends and family: Looking into your personal network to raise capital for your business venture can be a great idea. Everyone may have different stipulations and requirements, but this type of funding can come with lower interest rates and from someone who truly believes in your mission.
How Does Franchise Financing Work?
When seeking franchise funding, you’ll typically need a few things to show investors or lenders. This can include details about the franchise, your business plan, and your financial background. Lenders will likely do a credit check, just as if you were borrowing money for a home or car. Once approved, you’ll receive the funds needed to start your franchise and begin the repayment process per the agreed terms.
Embracing the Opportunity with CareBuilders at Home
Investing in a franchise like CareBuilders at Home means committing to a business model with proven success in the growing in-home care industry. CareBuilders at Home stands out by offering a low initial franchising fee, comprehensive back-office support, and a business model that eases the financial burden on franchise owners to make every penny of your investment worth it.
We’re looking for compassionate leaders who are ready to care for their community. To get started with CareBuilders at Home, you’ll need:
- Franchise fee: $49,500
- Liquid capital: $150,000
- Minimum net worth: $250,000
Our startup costs range from $115,200-$168,800. Ready to get started in the lucrative home healthcare business? Request information on CareBuilders at Home today!
