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If you have always wanted to be your own boss but the risk involved with starting up a business has always deterred you, we have great news for you. According to the International Franchise Association (IFA), it was estimated that nearly 11,000 new franchises would open in 2013 while banks were expected to loan nearly $24 billion to fund these franchises. Fortunately, the SBA has made it easier for aspiring entrepreneurs to acquire the funding required to start a franchise the business.
Can you own and operate a Franchise?
Before starting up your own business, it is always recommended that you gain some experience in the industry niche you are interested in. The fact that you are provided with years of prior experience and expertise through franchise training programs, as well as useful insights, is the primary advantage of owning a business of this type. This helps you to avoid a lot of trial and error experimentation that most business start-ups undergo.
Brand awareness is another one of the advantages provided by a franchise when you consider that establishing a recognizable is no small feat. Companies such as AM/PM and McDonald’s are perfect examples of these advantages. Another key advantage is that franchisors will most likely keep investing in their brand name and market awareness through different aggressive marketing mediums.
The most important aspect about all franchises is that they are streamlined and uniform turn-key operations. They have a formula in place that the franchisee simply has to follow in order to have some certainty of success. The downside is that you are going to surrender a lot of the independence that comes with owning and operating a business that is not a franchise because you have to follow the rules and regulations of the franchisor.
In addition to the many rules and regulations involved, one of the most critical aspects of a franchise business that you will automatically inherit is the perception that the general public may have of the business and the products or services that are offered. Additionally, you have to be willing to share that company’s reputation and work together with others in order to expand and grow your own business. The only way that a bad perception of a franchise might be changed for the better is if you demonstrate the value of your business.
Financing Your Franchise – SBA 7(A) Loan
The 7(a) Loan Program has been developed and structured by the SBA to be a flexible financing vehicle for aspiring entrepreneurs and existing businesses alike. You could have access to a maximum of $350,000 and an SBA guarantee of up to 50% of the total loan. Lenders will charge an average of 6.5% on these loans over the base rate of $50,000 or less and a maximum of 4.5% on loans of $500,000 or more.
For more information visit our SBA 7(A) Loan page.