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Small Franchise Funding
ronkimmons
subscriber Posts: 1
Hi all. I am an MBA student - set to graduate in August - and I have been talking to a business roundtable franchisor called CEO Focus. I like this business model a lot, and I feel that I would be very good as a CEO Focus franchisee/facilitator. Some of the things I like about the business model are:
Overhead is minimal. There is no need for inventory, employees, or office space.
Income is steady. Clients continue to pay on a monthly basis, and client turnover tends to be low.
This type of business is not very susceptible to market fluctuations.
Net earnings, before tax, can quickly reach $300,000 per year. (But that's where earnings plateau.)
However, as you may expect, it does cost money. The franchise fee is $25,000, and I estimate another $35,000 on top of that to cover initial marketing expenses and some miscellaneous expenses. But here's the problem: being a full-time student, I'm already saddled with a lot of debt, and I can't show a lender any steady income. So a bank loan is out of the question. As for equity investment, the income plateau and lack of scalability makes that less than ideal. So...what should I do? Are there any other funding options out there that I am missing?
Overhead is minimal. There is no need for inventory, employees, or office space.
Income is steady. Clients continue to pay on a monthly basis, and client turnover tends to be low.
This type of business is not very susceptible to market fluctuations.
Net earnings, before tax, can quickly reach $300,000 per year. (But that's where earnings plateau.)
However, as you may expect, it does cost money. The franchise fee is $25,000, and I estimate another $35,000 on top of that to cover initial marketing expenses and some miscellaneous expenses. But here's the problem: being a full-time student, I'm already saddled with a lot of debt, and I can't show a lender any steady income. So a bank loan is out of the question. As for equity investment, the income plateau and lack of scalability makes that less than ideal. So...what should I do? Are there any other funding options out there that I am missing?
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Comments
joehaffey: This is a service-based franchise, but it is neither telecom nor financial services. As for network financing, I assume you mean finding angel investors, etc., right? Yes, at the moment, I feel that this is my only option. One of the problems that I face is that I am not looking to sell equity, but to raise debt financing. As there is a revenue ceiling here, equity financing would not make much sense for either party.
robertj: As I am just now purchasing this franchise, and as I do not currently run one, I do not have any income streams to speak of. This is one of my problems. I suppose I can try to talk to a lender face-to-face, but if my online research is indicative of what I will find, I think I would just be wasting everyone's time.
ashleybrown: If I understand correctly, merchant cash advances are based upon past revenues from credit/debit purchases. As I am not yet in this business, I can provide no such evidence of revenues.
What I would like to do is raise $60,000 in debt financing under the agreement that I will repay $35,000 at the end of each year for the next three years, with the ability to pay off the debt early at a reasonable discount. Could anyone give me some ideas about how I could pitch this to potential investors - and how to find them?
Have you discussed with close friends/family or Crowdsourcing for this?
We work with a firm that specifically assists Start-ups and small business owners and may be able to help.
Feel free to connect or visit our site - lk