When you mention franchise investment to the average person, most of them think of one of two things. It’s either a chain of restaurants, often either casual dining or drive-through fast food, or else it’s a convenience store chain. Often one that also provides fuel services. The truth is, the franchise model has proven successful enough to permeate practically every industry, and in many cases the international arms of domestic companies are actually independently financed franchises with exclusive market rights to the product. That means investors opening businesses in the finance sector often find themselves needing franchise financing for their own companies at startup.
What Kinds of Franchises Exist in Financing and Real Estate?
The most commonly understood franchise businesses in this sector are those that handle real estate transactions. While some real estate brokerage offices are unified corporations, many of the largest chains are in fact franchised operations, selling the rights to the brand to brokers in territories across the country and making the core corporation’s income on marketing services, technology infrastructure, and brand licensing fees. They’re not the only offices to work that way, though. Many investors with branded affiliations to larger investment banks and firms actually work at satellite banks that pay franchise fees to exist in the branded network and take advantage of its infrastructure. Some mutual fund providers are in the same boat.
Financing for Franchises in the Industry
The biggest reason to pay for access to capital is to defer the costs to the future, when your income growth makes the overhead from the loan negligible. This allows you to reach a return on your actual out-of-pocket costs faster while preserving your own cash capital. As a result, even companies with deep reserves and a focus on high-value transactions featuring a range of assets wind up finding advantages in using a financing model at startup. It’s a bit funny when you think of some of the recent additions to the franchise financing industry itself are often among its most enthusiastic customers.
Why not? There are a variety of structures available, including some that allow you to use the capital flexibly while enjoying the fixed rates and amortizing payments you expect from a long-term asset loan, along with the long repayment terms. That makes them an elegant solution to what is often a complex problem. Get your business up and running, no matter what industry your franchise investment is in. Check out your options for financing that’s specific to your business model and put your money to work growing your new company.