Financing a Franchise in SA

Financing a Franchise:

Financing: So, you have taken the big step and decided to start a Franchise. Now, it is a question of finding the available funds to gear the business and drive it to a state of readiness. For this to happen you need to have financing in place whether it be own cash or borrowed cash.

The money for financing your 2nd Take Franchise business, is to be used in the following ways:

  • Establish the overhead structure for the business
  • Create a freedom to spend on working capital requirements
  • Buy stock
  • Facilitate staff payments
  • Marketing and advertising

 

Where can you get funding?

There are several options many of them endorsed by the relevant industry bodies:

  1. Own cash that is unencumbered
  2. Borrowed money from the four major banks (viz. ABSA, FNB, Standard Bank and Nedbank – see visuals below) etc.
  3. Ceded policies – life policies / retirement annuities / endowments
  4. Sale of fixed assets
  5. External Third Party Finance houses

 

FNB

FNB

 

Nedbank

Nedbank

 

 

Standard Bank

Standard Bank

 

 

ABSA

ABSA

 

 

 

 

* NOTE: the financing has to be vetted and approved – post a credit worthiness and diligence check

 

With 2nd Take the cost of entry is reduced being a low cost franchise. We have worked very hard to keep the cost base low and to drive value into the business. This economy is worked in both back end and front end.

 

This breakeven period is enhanced and facilitated even more rapidly with the easing of financing into the business making the ‘’state of readiness’’ period happen at greater pace.

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