Using Franchise Financing for a 2nd Location

Opening a new location can be tricky for any business, but when you own a franchise, you have more options than most small business owners. You could do what many do and use short-term financing for cash flow to maximize your working capital while you invest in new workers and equipment, spinning off the extra staff and machines into a second location after saving up. That is a common tactic.

Of course, you can also use franchise financing to get everything you need for your second location at once, just the same way you would if you were starting your first franchise location over again. There are a lot of great reasons to do this, especially now that you have the experience of having opened a franchise location before.

Flexible Capital for All Your Startup Needs

Franchise loan programs are built around the unique business model you are investing in. Since you have a pre-built audience, time-tested marketing strategies, and no choice when it comes to basic material suppliers in most cases, you need capital to cover the costs of buy-in and the equipment costs associated with starting up. That includes cash to cover your franchise license fee. Many franchise financing programs are set up to provide a single loan for all that value based on a down payment amount and other qualifying documentation, like itemized collateral lists.

Open Your Doors Quickly

Taking this approach gives you the best of both worlds when it comes to opening a new location. You can use the same strategies that allowed you to open quickly when you started your first business while bringing in experienced employees to cross-train and build on your existing relationship with your franchise of choice. The result is a much faster path to operations than when using most other financing options.

No Prepayment Penalties

If you have a profitable location already and you get another one up to speed quickly, it should be a simple matter of setting aside extra profits to pay off your financing early. Most franchise financing programs are built with this in mind, which means there are no restrictions to making early payments. If you manage to bring in windfall profits with a second location opening, you can pay off the loan package quickly and move into profitability. That might even inspire you to plan a third grand opening if your area has the customer demand to support it.