How do I build up my own capital?

8 October 2023

If you don’t have sufficient savings, you can ask friends and family for help, or try to obtain an honorary loan.


To bring a franchise project to fruition, you need to bring your own financial resources to bear. The brand requires this because it wants to be sure that the franchisee will be able to support himself during the first months of business, or in the event of a setback. More traditionally, the personal contribution is also used to convince the banker to grant a loan.

This personal contribution generally amounts to 30% of the initial investment, or even 40% in service businesses offering fewer guarantees – for example, a franchise without premises. Beware: in capital-intensive businesses such as catering or bakery, the total budget can easily exceed 300,000 euros, implying a capital contribution of over 100,000 euros. These are extreme levels. “In most cases, it doesn’t exceed 30,000 euros,” observes Nicolas Lopez, Director of Services at CrediPro.

Where do we get the money?

“Franchisees generally have sufficient personal savings in the form of current accounts, passbooks, PEL savings plans, etc. They can also call on family and friends to help them launch their business. They can also ask family and friends to help them launch their project. Finally, there’s a third option: honor loans, which are treated by banks as equity capital”, explains André Billard, head of the Franchising division at Banque Populaire, No. 1 in this segment*.

When resources are supplemented by family or friends, this is known as ” love money “. Bpifrance and the Fédération française de la franchise (French Franchise Federation) state in their Guide du créateur d’entreprise en franchise that “donations and subscriptions to the capital of companies offer a number of advantages for contributors, backed by special tax arrangements”.

If the franchisee is unable to raise the required sums, he or she can apply for an honorary loan from various organizations: Bpifrance, the Entreprendre network, France Active or the Association pour le droit à l’initiative économique (Adie) – a non-exhaustive list.

Bpifrance, for example, offers a “prêt d’honneur Création-Reprise”. This is a zero-interest loan of up to €80,000 over a period of one to seven years. The Entreprendre network generally advances sums ranging from 15,000 to 30,000 euros for job-creating projects.

Banks appreciate this approach: if the franchisee obtains an honorary loan, it demonstrates the seriousness of his project. What’s more, “it’s an excellent exercise before going to the banks, because you have to ‘sell’ your project, develop your sales pitch and sharpen your persuasive skills”, explains André Billard. You need to have made a full contribution before going to the banks.

The future franchisee should therefore aim very wide. He may even consider placing his project on a participatory financing platform such as KissKissBankBank or Lendopolis. These sites allow you to collect financial contributions from your friends and family, and from your “second circle”. They also give the project visibility.

Finally, if despite all these available levers, the franchisee doesn’t succeed, he can still turn to his brand. In general, franchisors have specialists who can help with financing. But this is a last resort. It’s best to do it yourself, to reassure the network head.

* Half of France’s franchisors and a quarter of its franchisees are among the company’s customers.

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