FranchiseLoan.com

What Documentation Do I Require to Apply for a Franchise Loan?

Before you try to obtain a franchise loan, you need to be have your financial documents organized, including the following:

• Your bank loan and SBA loan application forms
• Your personal history statement with your business resume and professional accomplishments.
• Current balance sheet, plus documentation explaining any financial issues
  Profit and loss statements, plus documentation explaining any financial issues.
• Projected income statement from the franchise company
  Income statement of previous and current year-to-date incomes, including business tax returns
  Statement of your financial investment capabilities
• Current financial statement of all personal liabilities and assets
• Projection of revenue statement
• Collateral list, including real estate, stocks and bonds and other security items
  Personal financial statement, with each owner itemized, including personal tax returns for each owner
• Your DBA or incorporation paperwork
• Copy of your business lease
  Loan request statement, describing business history, loan amount and purpose.

What is the Franchise Disclosure Document?

The Federal Trade Commission (FTC) requires sellers of franchises and other business opportunity ventures to provide prospective franchisees with the financial information required to make an informed investment decision. The FTC also requires that all earnings claims be documented, that the information franchisees receive be complete and accurate and that franchisees have sufficient time to evaluate these disclosures prior to any purchase commitment.

All required franchise information is given to prospective investors in the form of a franchise disclosure document, which must be furnished at least 10 business days before any franchise purchase may occur. This document includes many important items of franchise information, including:

• Names, addresses and telephone numbers of other franchisees, so they may be contacted.
• A fully audited financial statement of the franchisor.
• The franchise cost required starting and maintaining the business.
• The responsibilities stating franchisee and franchisor responsibilities.
• Notification of any litigation involving the franchise company or its officers.

What Are Other Costs To Consider When Preparing My Franchise Loan Application?

Here is a partial list of franchise related costs:

• Initial and continuing royalty payments to franchise holder.
• Franchise advertising payment costs, both to local and national advertising funds.
• Grand opening or other initial business promotions.
• State, national or local business or operating licenses.
• Product or service supply costs.
• Real estate and leasehold improvements.
• Related equipment such as a computer system or business alarm system.
• Staff and corporate training.
• Start-up and ongoing legal fees.
• Start-up and financial and accounting advice.
• Insurance including, health, business, key man, life, liability and property insurances.
• Compliance with local ordinances, such as zoning, waste removal, and fire and other safety codes.
• Employee salaries and benefits.