You’re in luck – U.S. franchises were expected to grow to more than 785,000, with overall GDP projected to be near $500 billion, according to the International Franchise Association.
The top 5 states for growth include Texas, Colorado, Arkansas, Florida and Idaho. Tennessee, Georgia, North and South Carolina and Nevada aren’t far behind.
Even if you’re not located in one of those states, though, revenue might be down or business expenses may be on the rise. Free up working capital or hold tight to business savings, and consider which franchise finance or loan option is right for you.
Why Research Small Business Loans for Franchises
Pay Franchise Fees
While franchises can be profitable businesses, there are dues you’ll always be responsible for, typically monthly. Royalties and franchise marketing fees factor as a percentage of your revenues, of which royalties are the most costly.
Depending on your specific industry, royalties can range from 4%-12% or higher, according to the U.S. Small Business Administration. These fees are apart from the upfront, one-time franchise fee you pay upon buy-in.
While your franchise may not require much inventory to operate, some do. Think of restaurants and convenience stores, your local Dunkin’ Donuts, Subway, Domino’s or 7-Eleven. If you’re looking to buy stock in bulk or just need funds to cover this month’s purchase order, a franchise business loan could help.
Buy New Equipment
Whether restaurant cooking stations or professional gym equipment, there may be a time when your franchise location needs an upgrade. Pieces become outdated. Others break down. Whatever the case, new equipment comes with a cost. That said, equipment financing can help you purchase or lease the machinery you need to maintain the status quo.
Maintain Your Lease
Having a space to operate is essential to running a brick-and-mortar business, but some months bring in more sales than others. When rent comes due, what can you do?
If your annual lease runs $50,000, you’ll need to come up with nearly $4,200 for a single month’s rent, not to mention the costs to keep the lights on as well as other essential utilities. That’s where a franchise loan can assist.
This isn’t a far-off figure, either. A recent Houston Chronicle article looked at a restaurant’s lease space in terms of a percentage of revenue. According to the post, oftentimes, restaurant leases are 5%-8% of total revenues.
Without staff, you can’t function. They, as well as your customers, are the lifeblood of your business. Whether you just don’t have enough to cover the salary for a new hire, or you need funding to get through a financially challenging time, franchise financing lenders can provide you with information on loan products for which you might qualify.