The first financing option is the franchise owner's own money. If the money is available to pay the franchise fee and get the business underway, this can be a good investment. Widjaya recommends that franchisees have extra money on hand as added security until the business becomes profitable.
The next option is financial institution financing. This can be "the way to go" for business owners looking for affordable financing, Widjaya says, as most banks are willing to finance franchises with a good proven track record.
Finally, there is franchisor financing. A select number of franchisors offer to help with financing, but Widjaya points out that potential owners will still have to prove themselves before their application is accepted.
Financing a franchise could soon become easier if the International Franchise Association has its way. The IFA recently voiced its support for the Small Business Job Creation and Access to Capital Act. The legislation would increase the loan amounts available through the U.S. Small Business Administration.
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