Top Financing Options for Franchise Entrepreneurs
If you’re like most people in the world, you don’t have a few hundred thousand dollars sitting in your bank account — and that’s okay! One of the most common things we hear from inquiring Camp owners is that they don’t already have the money to open a location. Though savings are certainly an option, we find that most people prefer to take out a loan.
Common Loan Options
A Commercial Bank Loan
If you’re in need of a large sum of money quickly and up-front (as most entrepreneurs are), this is one of the best options. If you’ve ever taken out student loans or a mortgage, you already understand the commercial bank loan model. Under this loan, you’ll be given all the money you need upfront. Then, you repay the bank, plus interest, each month until your debt has been repaid.
But it’s important to remember that the process isn’t as easy as walking into your local bank and getting a blank check. Before you’re approved for the loan, your bank will want to see your current expenses, savings, business plan, and personal credit history.
A Small Business Association’s (SBA) Loan
Similar to a Commercial Bank Loan, an SBA loan will give you a large sum of money up front for you to use on your business. However, SBA loans are partially backed by the U.S. Small Business Administration. What makes these loans so attractive is that they’re partially backed by the SBA. Because of this, lenders are more willing to give out loans to people with less than ideal credit or savings.
Friends and Family
That’s right, friends and family! Due to rising interest rates, more and more people are turning to their loved ones to help raise money. When working with friends and family, you have many more options. Typically, entrepreneurs choose to borrow money or bring someone on as a partner. If you’re borrowing money from family that trusts and supports you, you’ll likely agree to an interest rate that’s far less than the national bank average.
Regardless of which option you choose, it’s important to treat interactions with family as professional business transactions, meaning you should always draw up contracts that everyone understands, agrees to, and signs.
Camp Bow Wow’s Return on Investment
Our financial results speak for themselves. According to our Franchise Disclosure Document (FDD) for 2018, the latest year for which figures are available for Camps open more than 12 months, our top 25% highest-earning franchises generated an average of $1,225,676 in annual gross revenue, and the average for all locations was $841,890.* The average annual owner’s discretionary income was $238,068 for the top 25%, and $160,364 for all Camps open more than 12 months.**
* Figures represent averages for the 128 revenue-reporting franchises open and operating for more than 12 months during the 12-month period ending December 31, 2017. Of all 128 franchises, 56 exceeded the average of $841,890. Of the 32 franchises representing the top 25%, 8 (25%) exceeded the average of $1,225,676. Of the 32 franchises representing the bottom 25%, 15 (47%) exceeded the average of $514,553. The financial performance representations contained in Item 19 of our 2018 Franchise Disclosure Document also include: (1) select expenses for expense-reporting franchises; and (2) system-wide gross revenue.
** Figures represent averages for the 124 expense-reporting franchises open and operating for more than 12 months during the 12-month period ending December 31, 2017. Of all 124 franchises, 50 (40%) exceeded the average of $160,364. Of the 31 franchises representing the top 25%, 14 (45%) exceeded the average of $238,068. Of the 31 franchises representing the bottom 25%, 16 (52%) exceeded the average of $88,970. The financial performance representations contained in Item 19 of our 2018 Franchise Disclosure Document also include: (1) annual unit-level gross revenue; and (2) system-wide gross revenue.
If you’re interested in learning more about what it takes to join the Camp Bow Wow Pack and invest in a bright future and doggone good time, dial 877-700-2275 or request your free executive summary here!