---

Critical to starting a business is having the appropriate finance in place, and money alone is the number one reason most – as much as 90% - of business ventures fail during the early start-up period. While management failure does also play a part, it is money that makes any business worthwhile and gets it off the ground. At the same time, business franchising is a popular way of starting a business and becoming your own boss, and for a variety of reasons business franchising start-ups tend to be viewed more favourably by banks and investors. There are numerous key business reasons for this bias.

Firstly and most importantly of all, business franchising is a proven and tested business model. By virtue of being a business franchise, any opportunity of this nature requiring money has already been proven to work in another geographical area. Someone else has already demonstrated that the business model has the ability to work and generate revenues, and as such it has been franchised out to other business people. As such, banks tend to consider the business model less of a risk, allowing them to base their decisions on the faith they have in the individual in front of them rather than the specific intricacies of the business model.

Secondly business franchising is given more priority in funding because there is support available from the parties that have already made a success of the business. Because help is on hand and usually some form of training is provided, there’s no trial and error with a franchise. The franchisees know exactly what to do and how to do when it comes to making a success of the business, which translates into a lower risk proposition and makes them instantly more creditworthy. The only consideration running through a bank manager’s mind is whether or not the business will be able to repay the loan they are offering, and with a business franchising opportunity and the support inherent in that, they find their answer more readily.

Another key reason business franchising received funding preference from banks and other lending institutions is that there is already a degree of goodwill associated with the franchise name. This means that the business franchising opportunity will benefit from the branding and marketing previously invested in by the franchisor, which will give the new business a lift when it opens. Simply because a business has a recognisable identity and has previous goodwill, it is less of a risk and less likely to struggle to find those all important initial paying customers and lenient suppliers.

Business franchising as a business model makes sense, and everybody on all sides of the table are kept happy. For the banks and money lenders, business franchising provides a much lower risk way of investing in businesses, and a much more guaranteed way of earning money on the finance offered. As such, banks are much more willing to invest in franchising opportunities than in other business ventures, making it far easier to raise the necessary capital to start up and survive the initial few years.

Related Articles on Entrepreneurialism

1. Body Shop - Is This a Good Time to Sell? by Willard Michlin
   When is a good time to sell my body shop business? This article answers this question and more....
2. Buying A Business - The Basics by Willard Michlin
   This article discusses the basics of buying a business in today’s market....
3. Closing Escrow on Business Buying/Selling by Willard Michlin
   This article covers what is involved in closing escrow on a business and what you should expect....
4. Due Diligence 101 Or What You Don't Know Can Kill You! by Willard Michlin
   This article covers, in detail; exactly what due diligence is all about and how to really make sure ...
5. Financing a Business by Willard Michlin
   The simple ABC of what financing a business is all about, and what are the best sources. No hype, ju...
6. How Is the Value of a Business Worked Out? by Willard Michlin
   Did you ever wonder how the value of a business is worked out? Read on and find out!...
7. If You Don't Ask, The Answer Is Always No by Willard Michlin
   There is an old saying that is very true even today. It gives quite an interesting insight into the ...
8. Sanity Check - Buying a Business by Willard Michlin
   Does the purchase price being asked for make sense? This article helps you answer this question in d...
9. What to Look at When Buying a Body Shop by Willard Michlin
   So you think you want to buy a body shop? This article is a MUST, if you are so inclined! ...
10. Why Are Non-disclosure Agreements Used When Selling a Business? by Willard Michlin
    What is a non-disclosure agreement for a business and why the heck do I have to sign one?...
11. Phone Dating (Phone Chat) Business Basics by David Beyer
    This article gives a brief background on the phone dating (phone chat) industry and what new clients...
12. Limiting Business Risks And Reaching For Success by Nazeer Daud
    Entrepreneurialism in business is the driving force behind success. While everyone may naturally as...
13. Key Business Franchising Contract Terms by Nazeer Daud
    Business franchising agreements are commonplace, and tens of thousands of these contracts are signed...
14. Raising Capital For Business Startup by Nazeer Daud
    Raising capital for a business startup is one of the most difficult business tasks you’ll experience...
15. The Business Limitations To Entrepreneurialism by Nazeer Daud
    From a business perspective, entrepreneurialism is vital to commercial success and the health of the...
16. Quitting Employment For Business by Nazeer Daud
    Quitting stable employment for business is a brave move, but one that all entrepreneurs will have to...
17. Igniting Your Business Spark by Nazeer Daud
    Entrepreneurialism and business go hand in hand, and igniting your initial business spark and passio...
18. MLM Truth -or- Scam? by Ralph Henry
    If your reading this article you probably are wondering is MLM, Network Marketing a Big Scam? Be you...
19. Finding Something That Works by Lynn Shea
    Starting your own business can be hard, weather it is a home base business, or otherwise.You paitenc...
20. Raising Business Finance: The Entrepreneurs’ Journey to Executing Their Plan by Nazeer Daud
    Raising business finance can often be one of the most challenging times for an entrepreneur. However...

Related topics in Business and Finance

Submit Articles © 2008 KeepArticles.com, All Rights Reserved.