“Look before you leap,â€? is often given as advice. In today’s world there is plenty of capital available for franchise systems. Venture capitalists and private-equity investors have grown comfortable with the predictable cash flow and exciting growth opportunities in franchising. As a franchise company exploring financing alternatives, it is important to understand all of the options before jumping into any arrangements.

By Ray Barton


There are several reasons a franchise company may look for capital. Maybe there’s a need for growth capital. Perhaps it’s time to buy out partners or original investors. Creating liquidity for shareholders and management is also a common reason a franchise firm might pursue private equity.

A variety of capital sources exist, including:

• Senior Debt.

• Mezzanine Debt without Equity.

• Mezzanine Debt with Equity.

• Equity.

Read more here.

Originally posted by Dane Carlson on January 29, 2007 in Franchise Site.


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