Finance is an essential aspect of any business. It’s vital for its inception, progress, and determining a possible exit plan. You can use the franchise funding calculator to assess your financial standing.
A franchise funding calculator is informative
Understanding your financial position is essential in knowing your investment capability. Similar to buying a home, you want to know what you qualify for prior to starting the search.
What are you financing?
When exploring franchise opportunities, there are several figures that are typically the highlights in any advertisement. These figures are important for you to understand.
- Franchise Fee: The Franchise Fee (also called the “initial franchise fee”) is the one-time payment you (the franchisee) makes to the franchisor for joining the franchise system, usually upon signing the Franchise Agreement.
- Total Investment Range: Total investment is the total sum of the “Estimated Initial Investments” that is in a franchise’s Franchise Disclosure Document (FDD), Item 7. It is usually a range. This range usually includes, but is not limited to the franchise fee, all expenses necessary to open your business, and 3 months of working capital (typically).
- Cash Liquidity: This refers to the liquid capital you need to have access to to qualify for the investment opportunity.
- Net Worth: Before consideration for the franchise investment, you may need to prove that you have the required net worth listed to qualify for the investment.
- Royalty Fee: A royalty fee is an ongoing fee that a franchisee pays to the franchisor. This fee is usually paid weekly, monthly, or quarterly, and is typically calculated as a percentage of gross sales.
The headline figures are important, but remember you need adequate funding for your investment as issues can arise and you don’t want to go into an investment cash-short.
You are on the right track regarding investing in a franchise. Don’t let the figures you see online intimidate you. Talk to Fusion Franchising, an expert in the field, and we will help you find a suitable investment.