How can I open a franchise without a down payment? This is certainly possible, but the company’s services will be commensurate with this initial investment for your franchise creation…
So it’s better to take a financial risk, sometimes a big one, to set up a franchise, in the hope of a quicker return on investment.
Despite the franchisor’s willingness to integrate you into the network, there are still two main obstacles to launching your business: obtaining financing for your project, and finding premises that meet the franchisor’s requirements in a good location.
Here’s how to best anticipate these two crucial steps towards the commercial success of your project.
Financing : Silver, too expensive?
Playing tricks on yourself… more than you can count!
A poorly-constructed business plan, lack of market research or sales strategy… Difficulties in obtaining a business loan generally stem from a lack of preparation on the part of the would-be entrepreneur, who simply has to demonstrate his or her credibility in carrying out the project.
Other reasons for refusal are linked to the bank’s selection criteria.
Some sectors, for example, present uncertainties or are dependent on fluctuating regulations.
It’s always best to choose a business in line with consumer expectations, preferably in a developing market.
An overview, so you don’t get locked in twice
Whatever the case, the entrepreneurial candidate needs to “shop around”.
On the one hand, to put the different banking networks in competition with each other, in which the approach to your case and the validation criteria vary.
Secondly, because the involvement and relevance of your bank branch’s business advisor depends on the person with whom you will be defending your future.
Either this person turns out to be a man (or woman) in the field, who knows at least how to interpret a company’s accounts and balance sheets, and is capable of taking a decision (in relation to the delegation of power to the branch) or in turn bringing your voice to the attention of his or her superiors.
Not a feat of strength or magic
When submitting your financing application, three parameters will be decisive:
- The candidate’s profile: Never (never, never) a choice of entrepreneurship by default, intrinsic qualities of the candidate consistent and coherent with the envisaged activity…
- The coherence of the file: business plan – written part and tables -, concept correctly positioned in the catchment area in relation to the competition (market study), etc.
- The credibility of the figures put forward for the project: quality location capable of generating customer flow in line with expected sales, sales growth built up rather than exaggerated announcements.
We dare not remind you, in the case of a property purchase, of the difficulty involved in finding a loan, for which, naturally, you’ll go and see your banker, other establishments or even a credit broker.
Do the same to become a franchisee: take advantage of the competition to obtain monthly payments that are reasonable in relation to your lifestyle.
Local: hard limit
General alert!
In retail, location remains the cardinal virtue, and customer flow is the key to choosing the right premises.
However, finding commercial premises remains the main difficulty (along with financing the project) facing franchisees right up to the launch of their business. All the brands are in fierce competition for the best locations, often on similar surface areas.
What’s more, the premises must comply with the brand’s specific requirements, for example in terms of window space or the size of the storeroom.
It must be approved by the franchisor.
Quasi-military organization for a strategic act
So it’s a good idea to plan ahead when looking for your future business premises, and adopt a strict organizational structure:
- First of all, learn about the subtleties of commercial real estate, starting with the clauses of a lease (charges, activity, assignment, termination…).
- Next, explore all possible advertising avenues, not forgetting close contacts and word-of-mouth.
- Finally, adopt a minimum of methodology, including site visits and discussions with local residents and merchants around the site.
You need to position yourself on several premises at once, to better manage the stress and disappointment in the event of failure, and make it easier to negotiate with the landlord.
Finally, consider enlisting the help of a downtown manager. This expert knows the public and private players in the area, the urban and commercial projects, the cost of locations, and of course the premises available or about to become available, as well as the new commercial cells.
You have to think in the same way as when you buy a property: how can I feel good inside if the surroundings don’t contribute to my enjoyment of my new home?
The more difficult it is to get to amenities (or to customers in a business), the less I’ll enjoy my new situation.