It’s not as if franchise growth is anything new. For instance, 2016 saw franchise growth surpass non-franchise businesses AND the economy as a whole. Now that 2017 is half over, we’re seeing franchise growth trend upward; it’s projecting to exceed the previous year’s growth by almost $40 million.
According to the International Franchise Association (IFA), there are more than 733,000 franchise businesses which hold a collective 7.6 million jobs. This equates to $674.3 million in economic output, which further totals to 2.5% of the United State’s GDP.
Thus far, the Franchise Business Economic Outlook from January 2017 has proven to be fairly accurate, giving us the following statistics:
- Franchise businesses increase 1.6%
- National job growth increases 3.3%
- Output of franchise sector increases 5.3%
- GDP of franchise sector increases 5.2%
If you’ve wondered why many entrepreneurs are looking to get in on an existing business with franchise opportunities instead of creating their own, this explains why. The franchising business is certainly looking attractive right now to entrepreneurs who want to mitigate their business risk.
However, buying a franchise takes some hefty capital, and maintaining the franchise takes even more. Where do entrepreneurs find this kind of cash? There are a variety of different franchise industry loans available.
Loan Options for the Franchise Industry
A lot goes into buying and maintaining a franchise. While a lot of the heavy lifting has been pre-done (like overall marketing and brand recognition), the franchise owner is still responsible for their business as if it were their own. Thus, a lot of capital goes into making sure a franchise is running smoothly, in addition to the franchise fee needed to own the franchise in the first place.
- Working Capital: This is your basic accessible funds loan. This covers any and all miscellaneous expenses and ensures that there’s always money within the business to keep cash flowing.
- Inventory: Say you own a restaurant franchise. This cash goes toward making sure you always have a fully stocked fridge, fast food eatery trays, cleaning supplies, special sauces, etc. Apply this same logic to other types of franchises. You may not think this fiscal area of a franchise requires a lot of capital, but it can actually be the most demanding financial aspect of your business. Loans focused in this area usually have a quick turnaround time.
- Equipment: From POS systems to refrigeration units, franchises need to be consistently updated with technology and machinery that works. Equipment loans help franchise owners buy or lease equipment on their own.
- Expansion: Just because a business is a franchise doesn’t mean expansion isn’t possible. The capital needed to expand is likely a pretty penny, so franchise owners often look to loans to make their expansion possible.
Finally, franchises are often varied when it comes to business type and industry. If you own a franchise or are looking to purchase a franchise, consider an alternative funding institution like Qualifi . We offer personalized service to our clients, and we have well-fostered relationships with lenders that can help you realize your business dreams.