There are 3 key scenarios with a franchise buyout. The first is an entrepreneur wants to step into the world of business ownership and decides to adopt the franchising model so purchases an existing and well-established franchise from the existing business owner. Secondly, two business professionals may have initially started a partnership and invested in a new franchise, however now one wants to leave so a buyout is required. Thirdly, an existing franchise owner wants to purchase a second or third franchise in a new location.
The most influential factor in enabling any of these franchise buyouts is access to funding, rarely will an entrepreneur or a franchise owner have the funds available to complete an outright purchase. Fortunately, there are some excellent business finance solutions which can assist all 3 franchise buyout scenarios.
Scenario 1 – Business development loans
For entrepreneurs who want to establish a new business, but understandably don’t have the funds readily available, they can use a business development loan. Funding of this type allows the outright purchase of the business and repayment is made on a monthly basis over a set period of time.
Scenario 2 – Partnership buyout
Partnership buyout finance allows one of the franchise owners to access funding to purchase the business in its entirety from their partner. By taking advantage of the funding available the franchise will not see any negative impacts on cashflow so can continue to operate efficiently and continue with fulfilling necessary growth initiatives.
Scenario 3 – Resale finance
When a franchise is looking to purchase another well-established franchise in another location, they can use resale finance. As the name suggests this funding is based on the resale of a business so the loan amount is generally to the value of what the business is being sold for.
Our team of franchise funding experts have vast experience in arranging finance for buy outs. Recently we have enabled the purchase of a second franchise territory valued at £140K and have worked with a letting agent to purchase a new lettings book located in Lincoln.
If you have any questions or need some help with financing a franchise buyout, then our team would be delighted to help. Please feel free to call us on 01993 706403 or e-mail hello@ngifranchisefunding.co.uk.