Step Eight - Take Good Financial Advice

A few franchise systems do actually offer work or income guarantees that may be attractive to the newcomer. It is important to check what any guarantee actually includes, under what circumstances it is paid out and for how long it applies. Read more about guarantees.

Whether you are provided with projections or guarantees, get an accountant with experience of franchising to assess all figures. I stress that they should have franchising knowledge, as it is a specialist area and an inexperienced advisor may either miss or misunderstand some element. Experienced advisors will know what to look for. The Directory on this website includes a list of franchise-experienced accountants.

Encourage your accountant to contact the franchisor direct with any queries, and to work together to prepare a budget and cash-flow analysis for the initial trading period. You will find these invaluable when applying to a bank for funds, as the bank will want to know not only that you have the security but also that you will be able to repay the interest on borrowing.

The franchisor will usually be able to offer guidelines on an appropriate balance of financing between borrowing, overdraft and leasing for this particular business. Do listen to this advice; many franchisees start off under-capitalised, and that can lead to problems no franchisor can resolve for them.

Some franchise systems have established links with particular banks who consequently know the business well. This may help your application, although any bank will still want to be reassured of your ability to repay any loan.

Essential reading
Why use an accountant?
Will it make money?