Over the years I have been asked numerous times about the importance of a banking relationship in business and this is no less relevant to franchising. The most common questions I am asked relate to how much will we lend, over how long and what security will we take and generally other ‘lending / borrowing’ type questions.
When thinking about your getting the best out of your banking relationship you almost need to look at it as a food recipe with a number of ingredients for a dinner party. Get the balance of the ingredients right, the food tastes great, get it wrong and you end up trying to
Banking is more than about lending, yes lending is an important part but having the correct structure and banking processes in place are just as important. For example, say we give a franchise a £250,000 five-year loan to cover the net cost of buying into the franchise, refitting a site and paying associated fees, sounds great but no one mentioned that during the start-up phase there will be the need to pay vat quarterly, salaries monthly, payments to the
So to get the recipe right in this case, on top of the loan you would need:
This information is needed by your potential bank manager, before they propose to a credit function, to get the right recipe of facilities in place, get this right and your future meetings, whether on the phone or face-to-face, with your bank should revolve around looking forward and how you can best
This is really generic advice but it is vital to get the ingredients right but even more vital to ensure you have them in the right measures.
We are lucky in the UK that we have a number of mainstream banks that are experts in franchising, which may go some way to
Andrew Brattesani firstname.lastname@example.org