(FS5) What You Should Know About Angel Investors

Once you have gone through the traditional methods of financing the next thing you will want to consider is going with an angel investor. An angel investor is a person or group of people that offer funds for the startup of your business and in turn they have a direct role with your business.


There are several different ways that angel networks can work. It can be on a national, regional or local level. While each has their own stipulations, you will generally pay a fee to join or present your business plan. You may also be able to post information on the business and your plans that members can look at and respond to.


Angel Investor’s Role In Your Business

The angel investor’s direct role in the company is usually as an advisor for the company. They can give counsel that is invaluable to new franchise owners because they have the business experience to know what they are talking about.


The one thing to think about when considering an angel investor is to remember that they will become your partner. As such, they may require you to seek their approval before making business decisions. This means you will give up some control as well as some of the profits with this type of investing.


clubstore outlet franchisingOther Financial Strategies to Keep in Mind

You will also find that some franchisors will give you different strategies for financing to help make it easier for you. While not all franchisors will help you out in this way, you can always ask them to see if they will. Here are a few examples of other financing strategies that they may offer:


  • Leasing the land or building from the franchisor directly
  • Having a joint venture with the franchisor so that you can share a greater portion of the revenue with them and take on less risk
  • Supplier financing
  • Credit systems
  • Reducing franchise fees for corporate employees


There is also a program with the SBA called the Franchise Registry which gives you a list of franchisors who streamline the review process for SBA applications


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