Visiting a loan officer? Be prepared - Franchising: Special Guide

Nation's Business, Oct, 1993 by Paul DeCeglie

Tips You Can Bank On

* Do your homework. Make sure the franchisor is legitimate. Talk to existing franchisees about problems, pitfalls, and franchisor support. Research the market to determine if the concept works.

* Write a thorough business plan. Include personal financial statements, your

business background, a marketing plan, and projections on the break-even point.

* Shop around. Select a bank that has a relationship with you or the franchisor. Ask the loan officer how many loans the bank has made to businesses like yours over the past year. Ask other small-business owners in the area where they got their loans. See if the bank is involved in the Community Reinvestment Act program; it focuses on loans to small firms that promise to locate in the community.

* Focus your presentation on the strengths of the franchisor, your equity investment, and your professional skills and experience. Point out that you are buying an established name, a marketing model, and managerial support.

* Be honest. Share all of the information about your investment-both good and bad--with the lending officer. Bankers don't like surprises.

* Don't overlook alternative sources of financing, including your personal savings, loans from family and friends, and money from state job-development programs. A loan officer might be impressed that you are not depending on the bank to assume all of the risk.

Paul DeCeglic is a free-lance writer in Beverly Hills, Calif.