A franchise is generally seen as a very safe and smart investment one can make with their money. If that is the case, though, why doesn’t everyone try to obtain their own franchise?
The main issue is that obtaining the license and making constant payments can be rather expensive. Many people are unable to afford it or are too scared to take on the risks when there is that much money on the line.
How can you open up a franchise then? You can go about seeking investors to help put money into the licensing fee. This splits the risk among several people and allows you to get the franchise that you wanted. Convincing them to give you money might be difficult, though, especially without a proper sales pitch. You have to show them that not only will you make money, but you will make enough money to make it worth their time. Here is how you can find new investors for your franchise.
Pick the Right Franchise
Investors will only look to give you money if you can guarantee that they are going to see a profit from it. With large sums of money, people generally want to avoid risks and go for something that they know will net them the money that they need. This is where it comes down to you to help convince them.
The first thing that you have to do when finding an investor for your franchise is to show them what franchise you are planning on licensing. Which one should you pick? The experts at Approved Franchises say that there are always franchises available for licensing in your area. Along with that, you should look into breakdowns of the profits these franchises make and what you should expect. The comparisons are important as you can use these sheets to help convince investors of your choice.
Having all the details laid out helps immensely in finding investors, as now you can show them how much money you stand to make and how long it will take for them to make back their initial investment. If you pick a franchise with a poor track record or little to no profit margins, you will find it difficult to find anyone to invest in you. Take the time to do your research and make sure that you are picking the best possible franchise. Only then will you begin to find new investors.
Incentivize The Investment
People don’t invest in you solely because they want to see you succeed. People invest because they believe that they can make money from what you are doing. From there, not only do they expect to get their initial investment back, but they expect much more depending on how much they have helped you with.
As the person who is getting the investment, you have to come up with a plan to convince them. This can mean coming up with a payment plan over several years to give them their money back or determining quick lump sum payments followed by monthly payouts. Benefits never hurt as well. As you are going to be the owner of the franchise, you can offer them special deals and sales on anything they wish to buy in the store.
You need to show them that you are going to be responsible for their money and have an idea of how you are going to get them the money that they are expecting. Take some time to create a business model and show forecasted profits. Throw in some benefits and decide on an interest rate in which they will be paid. If you don’t want to pay out, talk about how you want to divide the franchise percent wise. All of these are important factors that will determine how many investors you can get for your franchise.
Streamline All Your Franchise’s Resources
Even though you have already shown them profits, you have to ensure that you have streamlined all of your franchise’s resources and that they can pull up any information that they deem necessary. Whether it be an expense report or a balance sheet, if people are looking to spend money on you, you have to be able to produce important information.
If you attempt to hide this information or don’t have it ready, investors will begin to question why you are doing so. As mentioned, with large investments such as a franchise, people are not looking for risk. They are looking for safety. If any numbers are hidden from them, in their mind, they will be taking a risk on any money that they invest. Make everything public and answer any questions that you need. By streamlining the franchise’s resources and making them public, you can attract and win over new investors.
Have a Great Sales Pitch
Finally, none of this information matters if you cannot sell your investors on what you are planning to do. This means that you have to have the charisma and confidence to convince them that you are the right choice to invest in. If you come across as weak, investors will think that it also reflects the way that you do business. Before you start talking to your potential investors, know every detail of your sales pitch and the answers to any possible questions investors might have. Take the time to practice and rehearse a sales pitch that will blow any future investors out of the water.
By following all of these tips, you should be able to win over several new investors for your franchise. Ensure that your legal bases are all covered when it comes to bringing people in. Remember that when you have investors, you always have to keep them happy and assure them that they have made the right choice with their money. Show them as many previous financial statements as you have, and be prepared to produce new ones for them as they come. Soon you will be reaping the rewards of a great franchise. How do you plan on getting new investors?