House price rise gives options for franchise buyers
Nick Strong - Franchise recruitment advisor
According to the Nationwide, the average price of a home is now £160,224, up from £158,871 in July. While prices are still lower than last year, the annual rate of decline in property values slowed sharply to 2.7%, compared with July’s 6.2% fall.
Clearly house values can go up as well as down. We have seen this during the current economic climate and the current rises may be due to reduced stock available. However, the rise in house values may be a boost for confidence to lenders and borrowers considering buying a franchise.
In addition the UK government has actioned its plan to guarantee £20 billion of small and medium loan guarantees. Banks and thier franchise departments have respond positively to lending to franchise business.
The banks are keen to work with proven franchisors and well prepared franchise buyers. As far as the banks are concerned a proven franchise business is one that fits at least the following criteria:
- Ideally the franchisor will be a member of the British Franchise Association
The bank will have a good and open relationship in existence with the franchisor
The bank will be happy with the franchisor’s financial performance
The bank will be happy with the franchise buyer’s financial history
A preferred franchise buyer for the banks is a person, partnership or business that has a well prepared business plan. The plan will demonstrate the franchise buyers understanding of:
- The market they are wanting to enter
Local competition
Substantiated argument for potential projected revenue claims
Why the franchise is right for them and the territory being offered
How the franchise buyer plans to secure the loan funding
How much liquid capital it will require to run the business
How the new franchisee will manage cash flow and personal living expenses during the first year of trading
The banks are very keen on lending to new and existing franchise business because the NatWest/BFA franchise survey confirms that year after year that over 90% of UK franchisee run businesses are profitable. That means that a new franchise business have over 90% success expectation which is by far better than the statistics of go it alone entrepreneurs.
Franchising is a proven way to increase personal succcess in self employment. The banks like it and in many cases franchise funding from the small business loan guarantee scheme may be used during 2009 to fund franchise business development.
For research of franchises for sale and expert comment visit www.SelectYourFranchise.com.
Tags: bank lending, franchise buyers, house pricing, nick strong
