Q Will a franchisor help me find finance?

There is no obligation on a franchisor to help a franchisee find finance to help it start operating a franchise business, but clearly it may be beneficial to the ranchisor to do so.One way a franchisor can provide assistance is to build a relationship with a particular bank or number of banks. To do this the franchisor will give full details of how the franchise operates, together with details of the capital that will typically be required to set up the business and ongoing running costs. The franchisor will also keep the bank updated with how the business is performing.Where a bank has this background information, it may potentially make the process for the franchisee obtaining finance easier, although a bank will need to carry out all its usual background and due diligence checks on each individual franchisee before deciding whether to make an offer.However, not all franchisors will do this and the franchisee may have to find its own source of financing. Occasionally a franchisor might offer to lend money to a franchisee. However, this should be approached with caution as it could lead to a franchisee becoming financially dependent on the franchisor, as well as blurring the franchisor/franchisee relationship.Alternatively, a franchisor might offer a deferred payment mechanism, where it allows a franchisee to pay any fees, particularly initial fees, when the franchise becomes profitable. Some commentators advise that such an offer suggests the franchisor is desperate to sign up a franchisee and so any such offers should be questioned.