A successful franchise business is one that can adapt to the changing business landscape. Having developed a proven business model, they will continue to invest in staff and infrastructure.
A franchise will need several soft assets to help with the successful running of the business. A soft asset is something which is intangible but does hold a significant value for the franchise. These types of assets can include licences, equipment, software, trademarks and intellectual property.
Some of the most popular soft assets required by a franchise are:
- Hardware & Software
- Catering Equipment
- Gym Equipment
- Office Refurbishments
A franchise needs reliable soft assets. On occasions these will need to be replaced and upgraded or new items sourced. At this stage soft asset finance can be very beneficial as it enables the purchase of these items.
Two important possibilities with soft assets are:
- By financing the purchase of soft assets, a healthy level of cashflow can be maintained. The asset can be purchased and flexible repayment terms can be arranged.
- Growth and innovation plans can be initiated. A franchise can invest in R&D (research and development) projects, innovation and intellectual property.
When purchasing new soft assets there are two specific types of asset finance which are typically most favourable:
- Hire purchase – a simple way to spread cost, a business will pay a fixed rate of interest with repayments made on a monthly basis.
- Finance lease – the hiring of an asset for a fixed contract again with repayment monthly. At the end of the term, it can be extended, a new agreement sourced or the contract can simply end.
The NGI Franchise Funding team are experts in arranging soft asset finance. In recent months we have enabled a printing franchise to purchase new printing equipment with a value of £50K. We have worked with a fast-food outlet to purchase new kiosks for customers to place food orders. Finally, we have assisted a franchise associated with a global fried chicken brand to purchase new catering equipment which totalled £100K.
If you have any questions or would like some help with soft asset finance, please call us on 01993 706403 or e-mail hello@ngifranchisefunding.co.uk.