Aug
11
Buying a franchise of a successful business requires a lot of money. However, the establish business carries a name that is carried with the franchise and this attracts customers. Also, any corporate marketing benefits the franchise buyer. Establishing a franchise requires locating and renting a suitable site as well as costs of construction of renovations that may amount to US$20,000. Also, the franchise owner must have enough money to buy enough weekly supply of products from the mother company.
Assuming the products are widgets costing US$105 each and a weekly inventory turnover of 100 widgets, this amounts to US$10,500 for a total capitalization requirement of US$30,500. With a standard selling price of US$120 per widget or US$15 profit per widget, this results in a weekly profit of US$1,500. Thus, if the franchise owner takes all capital from Small Business Loan of US$30,500 at a balance based interest rate of 2% per month, this results in US$3,660 total interest or a total payable of US$34,160, or a weekly cost of US$657 per week. This produces an profit of US$1,500 minus US$657 or US$843 per week for a total profit of US$43,840 the first year and a subsequent profit of US$1,500 per week or US$78,000 a year. Thus, working loans such as these as well as other unsecured loans, like Small Personal Loan and Payday Loan can really help an entrepreneur.