Creating a business, financing your project: Convincing your banker in 3 steps

To bring an entrepreneurial project to fruition, it is often necessary to seek external sources of financing, among which banks occupy a central place.

Convincing your banker of the viability and profitability of your project is therefore an essential step in obtaining the necessary financial support. With the help of our experts, we will explore the three key steps to convincing your banker.

Franchising offers 3 key advantages

According to Banque Populaire's 20th annual franchise survey, three-quarters of franchisees say they find it easier to obtain bank loans when they operate under a franchise agreement. This is because franchising offers three key advantages that bankers consider: security, support, and a favorable environment. Becoming a franchisee can therefore be a magic formula for securing the necessary financing.

Before meeting with your banker, it's essential to have a clear understanding of the brand, to have reached an agreement with the franchisor, and to have identified a suitable location for your business. Choosing the right bank for your franchise project is also crucial. Rather than speaking with a general account manager, it's recommended to schedule an appointment with a banker who is well-versed in franchise operations and offers specific solutions tailored to this model.

A contribution of approximately 30% of the overall project is recommended.

Regarding the amount needed to open a franchise, it's important to have sufficient capital to cover equipment, inventory, and working capital. Depending on the sector, financing requirements may vary, but generally, a down payment of around 30% of the total project cost is recommended. Fortunately, even with a modest down payment, it's possible to launch a business thanks to accessible financing options and loan amounts often under €50,000.

During the meeting with the banker, it is essential to demonstrate your motivation, prepare a compelling pitch, and highlight the human side of your project to evoke emotion. It is also recommended to seek guidance from a chartered accountant to develop a realistic cash flow forecast and prepare all the necessary documents, particularly the Pre-Contractual Information Document (DIP), which contains essential information about the franchise network.

In conclusion, convincing your banker to finance your entrepreneurial project may seem daunting, but by following these three key steps and preparing thoroughly, you can maximize your chances of success. With a clear idea, a solid financial plan, and a compelling approach, you can realize your entrepreneurial dream and secure the financial support needed to grow your business.

At Franchise Expo Paris, bring your business creation projects to life.

Frequently Asked Questions about Franchising

Why do banks more readily finance certain franchise projects?

Banks generally favor franchise projects because they are based on a proven concept, an established brand, and support from the franchisor. These elements often help reduce some of the uncertainties associated with starting a business and can strengthen the credibility of the application.

How much personal investment is required to open a franchise?

The amount of the down payment varies depending on the sector of activity, the brand, and the level of investment required. Generally speaking, having a personal contribution demonstrates commitment to the project and facilitates obtaining additional financing from a bank.

What documents should I prepare before a bank appointment?

A prospective franchisee must generally submit a detailed business plan, a financial forecast, their financing plan, information about the chosen brand, and evidence to assess the project's profitability. The more complete the application, the more confidence it inspires in financial institutions.

Why is choosing the right bank important?

Not all banks have the same level of expertise in franchising. Some institutions are particularly familiar with this business model and offer solutions tailored to the needs of franchise entrepreneurs. It can therefore be helpful to compare several providers before making a decision.

How to succeed in your interview with a banker?

Beyond the figures, the banker also assesses the project leader's motivation, their understanding of the market, and their ability to manage their business. A clear presentation, a coherent argument, and a solid grasp of the project often help to strengthen the lender's confidence.

Why use a chartered accountant when preparing financing?

A chartered accountant can help build a realistic financial forecast, analyze the project's profitability, and prepare the financial documents required by banks. Their support helps ensure the project is well-structured and presents credible assumptions to financial partners.

Can the Pre-Contractual Information Document (DIP) be useful for obtaining financing?

Yes. The Disclosure Document (DIP) contains a wealth of information about the brand, its history, its network, and its market. This information allows financial institutions to better understand the environment in which the future franchisee will operate and to assess the viability of the project.

Is it possible to create a franchise with a limited budget?

Some service or consulting businesses require a relatively small initial investment compared to other sectors such as restaurants or food retail. Franchise opportunities now exist to suit different budget levels and personal investment levels.

What are the main criteria considered by a bank before granting financing?

Banks typically analyze the soundness of the concept, the quality of the location, the level of personal investment, the coherence of the business plan, the experience of the project leader, and the profitability prospects of the business. Thorough preparation beforehand significantly increases the chances of securing financing.

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