How Do I Finance My Franchise?

Salon franchise owners can choose among a variety of financing options

Funding your own business is not as daunting as you might think, especially not with an iconic brand like Fantastic Sams, which has a 40-year history of success. Our franchisees have tapped a variety of financing sources over the years — conventional loans, SBA loans, retirement loans and home-equity loans, as well as unconventional funding sources. Fantastic Sams has dedicated partnerships with large lending institutions that help streamline the loan process.

Here’s a closer look at some of the ways you can fund your Fantastic Sams franchise:

Local and community banks. The biggest single source of financing is local banks, which are supported by guarantees through Small Business Administration loan options. Local banks are often less restrictive with candidates who are locating in their areas.

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Bancorp Strategic Partnership Financing. Through a strategic partnership with Bancorp, potential Fantastic Sams franchisees can obtain financing approval during the application process without the hassle normally associated with obtaining a business loan. More than just a cross-marketing agreement, Fantastic Sams and Bancorp are partners in this process, which means franchisees benefit from a streamlined approval process, great interest rates, and the convenience of avoiding massive amounts of financial filings with the banks.

Small Business Administration loans. Fantastic Sams is an approved franchise on the SBA National Registry, which is accessible to all SBA commercial lenders. The SBA registry offers a list of franchises that have had their Financial Disclosure Documents and operations vetted by the Small Business Administration, giving lenders access to information that minimizes their risk. Fantastic Sams’ presence on the registry saves several steps in the SBA lending process for franchisees.

Tapping a 401(k) or IRA. A franchisee or a family member can tap into a 401(k) or IRA retirement savings to fund a business without facing financial penalties for early withdrawal — as long as they do it the right way. Tapping retirement funds requires a series of legal steps, including the creation of a C corporation and corporate retirement account, and movement of corporate stocks. It’s become a popular financing option because it allows you to, in effect, lend to yourself, sidestepping reluctant banks.

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Cash. While Fantastic Sams only requires a minimum liquidity of $70,000, you may have more capital you could use to get started. If you have the liquidity, cash is always a great way to invest. Your savings could be the key to unlocking a richly rewarding investment without the hassle of third parties, tax penalties or interest rates.

Home refinance or equity line of credit. As the housing market rebounds, you might have more equity in your home. Often potential franchisees are able to refinance their homes, thanks to low interest rates, and pull enough capital out to purchase a franchise. You also might be able to secure a line of credit based on a portion of your home equity, which can help with ramp-up costs.

Minimum requirements for starting a salon franchise

The typical investment for a Fantastic Sams franchise is $185,000. Franchise candidates need a minimum net worth of $300,000 and at least $70,000 in liquid capital. The numbers will vary depending on how many units are purchased, since we do offer deals on three- and five-salon packages. The investment also is dependent on whether you will renovate an existing salon or build a new one. Fill out the form at right to have one of our franchise development specialists contact you with more detailed information.

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