22
return on investment?’ This is even more important when the economy
is under pressure. Yes, this may present unique opportunities, but it can
also increase the risks.
Do I truly understand the figures?
Get professional advice, but understand the figures yourself. Ask your
franchise accountant to assist with cash flow projections, which will
help you understand what makes the business profitable, and the
funding required.
The next questions should be
directed at your current or proposed
funding provider:
Is my current bank
equipped to help?
Does your bank have the franchise
system knowledge, benchmarking and
strategic relationship with your chosen
franchise system to deliver real
added-value lending as well as
transactional benefits?
Does my bank offer a
franchise lending policy?
This is, as opposed to a generalist
business manager, normally requiring
100% security. You want your banker to
add value with the initial lending, based
on their knowledge of the business
model and benchmarking. But also show ongoing commitment to the
system beyond the initial lending. An example could be franchise-
specific merchant payment solutions.
n our winter issue, Westpac’s Daniel Cloete looked at Return on
Investment. Now, he covers the funding aspects of buying a franchise
and how the price of a business affects the ability to obtain funding.
How much money do I require?
Franchise adverts can be very confusing because franchisors don’t all
use the same assumptions. If the capital requirement is listed between
$90,000 and $120,000, what’s included in this price? Does it include
the franchise fee and, for new outlets, the fit-out? Does it include
equipment, legal costs and accounting fees? Is this the total cost of your
investment or does it only reflect the cash equity needed?
How much can the business afford?
After getting a good idea of how much your new business is going to
cost you initially, and the ongoing payments to the franchise system,
the next question should not be ‘how much I can borrow?’ Rather, ‘how
much can the business afford, while still delivering a decent living and
Twelve questions to ask before
seeking finance for a new business
Buying a Franchise: Funding
Daniel Cloete
Franchise New Zealand Spring 2024 Year 33 Issue 03
FUNDING A
FRANCHISE
BUSINESS
NZ Enquiries:
franchise@packsend.co.nz
P: 09 887 9444
www.packsend.co.nz
ACCELERATE
YOUR GROWTH
with a future proof
franchise business at
DELIVER THE DIFFERENCE WITH PACK & SEND
Find out how the PACK & SEND franchise system can
bring your business dreams to life. Contact us now!
Join PACK & SEND, a globally recognised
franchise with a dynamic business model
equipped to provide 5-star solutions to
the parcel, freight and logistics markets.
Extensive national network
(and growing)
Multiple revenue streams
Asset light business model – No fleet
of vans or large warehouse required
Part of the $3 billion+ parcel industry
SCAN TO
ENQUIRE
• Established business model and robust systems
• Customer service focused
• No Industry Experience Required
• Ongoing training and support
• Comprehensive marketing support
• Strong supplier relationships
• Opportunities across New Zealand
Email us at Franchises@ezykitchens.co.nz or
apply now at www.ezykitchens.co.nz
ARE YOU LOOKING FOR A
FRANCHISE OPPORTUNITY?
FANTASTIC