FNB Franchise & Leadership Summit: How to finance a franchise
Presenter: Morné Cronjé, Head: FNB Franchising
Morné started his banking career in 1996. During this period, he built up extensive experience across a wide spectrum of banking disciplines including franchise funding. He has been involved with franchise funding since 2003. Since then, he has built up deep insights into the South African franchise sector. He also gained deep insights into the interaction between franchisor, franchisees and the bank.
The bank’s approach to franchising
At the outset, Morné explained why FNB are keen to provide funding to the franchise sector:
- The bank sees franchising as a major contributor to the country’s economy.
- The value of the brand and its track record, when seen together with the support the franchisor provides, tends to reduce the bank’s risk.
- Risk is further reduced because skills transfer takes place and the franchisee conducts business using tried and tested systems and procedures.
What franchisees need to know
To qualify for funding, franchisees need to prove that:
- They understand the brand, its culture and the market within which it operates.
- Are fully aware of the total investment required and how they propose to fund it.
- Know how to manage finances.
Documents required to support the funding application
- A comprehensive and credible business plan and cash flow projections. (It is important to note that the generation of these documents should not be outsourced to a consultant. The applicant must own them.
- The franchisee’s CV and detailed personal financial information.
- A detailed schedule of funding requirements, how the loan will be spent and how it will be repaid.