Cheerful Shopowner in Doorway

Opening a franchise location is a great step for many first-time small business owners! There are many benefits to franchise ownership, including business support from the franchisor, lower business risk, and existing brand awareness. However, opening that location can be costly, depending on the franchisor’s fees and whether purchasing commercial real estate is included. That’s where SBA lending comes in!

If you’re ready to own a franchise location, follow these steps:

  1. Choose a franchise and apply for ownership.

    There are thousands of franchises across the United States, each with their own capital requirements for entry, brand awareness and levels of profitability. The up-front due diligence and deep-dive into a franchisor’s system is an important initial move. Take time evaluating whether their systems and opportunities align with your business goals and future growth plans. Once you’ve identified the right franchisor, it’s time to apply. Each franchisor will have their own application process and personal financial requirements. Make sure you have your financial statements updated and available.

  2. Evaluate your start-up costs.

    Every franchisor will require a franchise fee to open your own location. Depending on the industry and location, this can range from a few thousand to low six figures. In addition to this franchise fee, you will also want to consider the cost of:

    • Purchasing or building a property
    • Equipment and leasehold improvements
    • Inventory and other material costs
    • Royalty fees, recurring expenses, and working capital

    Most franchisors will have their own finance team to help navigate the required costs of their franchise packages. It’s good to loop your financial team, including your accountant or advisor, into those conversations. Having a detailed breakdown of your expected costs and the required opening costs of the franchisor will be helpful when applying for financing.

  3. Find an SBA lending partner.

    SBA loans are a popular lending option for small business owners opening that first franchise location or expanding to additional locations. SBA financing provides the benefits of lower down payments, longer loan terms, flexible rate options, and multiple uses of proceeds in one loan. The same level of due diligence that went into your choice of franchisor should be applied to your choice of an SBA Lending Partner. Most Franchisors have their group of preferred lenders which is a good stepping point to get initial feedback. However, you should take the time to independently research other protentional lenders. Make sure the SBA Lending Partner you work with understands your current and future business goals and has your best interests at heart.

    Our experienced Business Development Officers have worked with dozens of prospective franchisees in many industries and can structure a loan that fits your needs. Many of our SBA loans for franchisees provide financing for the start-up fee, renovations, equipment, working capital, and more.

    At FNB Small Business Finance, our team is dedicated to getting the job done. With years of experience in SBA franchise lending, we’re here to serve as your guide through the lending process from application to closing. In addition to specialized experience, you can also count on the stability of FNB as a whole. As a 159-year-old bank, our stable and diversified deposit base can give you peace of mind when partnering with a financial institution. We look forward to achieving success together!