Starting a business is never cheap. And, if you’ve decided that the best way to achieve your goals and to realise your dreams is to become a franchisee, you must now figure out how you’re going to raise the capital to pay for the franchise fee, inventory, and capital you’ll need until your franchise starts earning a profit.

Finding the capital to start your franchise business is the first step to your ultimate success. Here are several ways you may be able to find capital to become a franchisee:

Find out if the franchisor offers startup loans.

Some franchisors offer franchisees financing, such as startup loans, to make it easier for them to purchase a franchise. Find out if the franchise you have chosen offers such an option or if the franchise offers any type of financing to make startup easier. If it does, be sure to ask plenty of questions, including the interest rate and the term of the loan.

Finance Your Franchise

Secure a loan.

Traditional banks often lend to small businesses, including aspiring franchisees. If you plan to apply for a bank loan, be sure how much you need to borrow. Before signing any loan documents, make sure you know the length of the loan, the interest rate, and the consequences if you miss a payment or do not pay on time.

Find a business partner.

Sometimes raising capital the traditional ways simply isn’t possible. If you can’t find a viable means to secure the funding necessary to start your franchise, look for a business partner who may have access to funding or who is interested in building a franchise with you. An alternative to a business partner would be to find a venture capitalist, who will provide the funding for you providing you pay the funds back.

Ask family and friends.

Asking family and friends for loans, or even straight out for a gift of money, is one of the most popular avenues for raising capital to start a franchise. If you accept loans from family and friends, make sure you keep careful records. How much did your family member or friend loan you? Did you come up with a repayment plan (you should)? Will you pay interest? Outline the terms before accepting a loan from someone you know, just as you would with a financial institution.

How do you plan to find the capital to become a franchisee?