Financing the Business

Financial Obligations of Franchisees

Financing Arrangements

Financial Resources of Franchisees

Leasing

LSU Law School

One of the essential ingredients of the proper operation of a franchised business is the sufficient financial planning and support of that business. It is important to recognize the financial obligations associated with purchasing and developing a franchise operation. Some franchisors, will provide financial support to potential franchisees; however, most franchisor are unable to offer such assistance, and franchisees must seek financing on their own.

The franchisee needs to research sources of potential financial support - family, friends, relatives, and financial organizations, including banks, credit unions, and other lending institutions. The franchisee must determine if he or she will accept debt financing or equity financing. The franchisee must also prepare a business plan or feasibility study showing the cost and projected income from the franchising operation. This may be used to show prospective contributors the financial strength and investment potential of the franchised business.