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Should You Ask Family For a Loan To Start Your Franchise?

Written on October 29th, 2007 by Ryan Lee in brandEXPANSION News.

After deciding to invest in a franchise, it’s quite obvious that you start thinking about how to get the money. Not everybody is self-financed; you may need financial help from someone. The most common practice is to approach an investor. But, before you do that, think about the option of asking for help from near family members. Most of us will hate to do it, because it may damage the relationship with that relative. There are ways of overcoming that, though.

Let’s first see the advantages of borrowing money from a family member. Here, you do not have to give an elaborate presentation to a bunch of stony-faced investors in their office or run after them to get an audience. Instead, you participate in a family get-together in the cozy environment of your or a relative’s home and start speaking to people whom you have known for most of your life. But, that does not mean that you can take it casually; be well-prepared to sell the idea of the franchise with full confidence and information. Make sure that you have answers to all possible questions. Insist that everything will be on paper, so that there is no scope of confusion or misunderstanding in the future.

The next good thing about asking for help from your relatives is that you can easily fix how you would return your borrowed money. Again, make sure that you have explained them well how and when you are going to pay. Offer them a stake in the business, only if you are confident that it will be a success. If you do all these things properly, then the major drawback of asking help from a relative, i.e. a damaged relationship, will be averted. Have everything in writing and follow that accordingly, so that you do not have to avoid any family gathering in future or hide from anyone!

Perhaps you don’t have a family member who has money to invest, or don’t have the kind of relationship with them. There are a number of programs that can help you find money to launch your franchise.

To get more tips and information regarding this topic, consult the brandEXPANSION associates.