Franchise Funding: How Cash Converters does it
If you’re just about sold on the franchising model, but are worried about the money side of things, here’s everything you need to know to put your mind at ease. The good news is that financing a franchise is easier than financing an independent business; most commercial banks are comfortable with the franchise mechanism and know that franchisor support mitigates some of the risk.
The capital required upfront
When it comes to franchising, as a general rule of thumb, the banks require 50% of the total investment to be supplied by the franchisee – this is known as ‘unencumbered capital’ and has to be totally liquid. This is the key specification in order to apply for finance for the balance of the amount.
What exactly is unencumbered capital?
Unencumbered capital essentially means your liquid assets – or assets that can be readily liquidated (or sold) for investment purposes. This includes, for example, assets such as cash in the bank or bonds or stocks that can be sold on the stock market. The franchisee is normally required to invest a minimum of 50% of the total investment and may finance the rest.
How Cash Converters does it
The level of investment required for a Cash Converter’s franchise is R4 Million (all-in) for a 250sqm store. For prospective franchisees to qualify, half of the total amount is required upfront, in cash, while the balance can be financed through your institution of choice.
Support for our franchisees
At Cash Converters, we have a dedicated franchise sales support team that facilitates this process with the banks – we have a long-standing and sound relationship with them. We understand the size of the investment involved and it’s for this reason that we provide the level of support and infrastructure that we do. After all, your success is our success.