Applying for funding for your franchise
Banks look more favourably on potential franchisees who demonstrate commitment. One of the surest ways of displaying this is to contribute some of your own equity into the business. It means that you, as a franchisee, are serious about your future, and are ready to take on some of the risk involved, whether you are buying your first store, second or subsequent store, or revamping your store.
Many franchisors require franchisees to make a sizeable, unencumbered upfront payment. This buy-in helps franchises with viability and ensures that the debt is reduced to manageable levels, which will be vital when cash flow is slow during the initial months.
The bank will require the following information from you when you apply for franchise funding:
- Written confirmation from the franchisor that you have been approved as a franchisee.
- A copy of your ID.
- Your personal balance sheet, showing your assets and liabilities.
- Information relating to your background, similar to a CV.
- Proof of the origin of your unencumbered deposit.
- A comprehensive business plan.
- A copy of the lease agreement.
- A copy of the franchise agreement.
- A copy of the signed agreement of sale, stipulating the conditions of sale.
- A breakdown of equipment to be financed, including rand value per article.
- Applicable CIPRO registration certificates.
- Signed financial statements and a 12-month cash flow projection. If the financial statements are older than six months, up-to-date management accounts will be required.
- Six-months’ bank statements of the business trading account.