Overcoming the Most Common Franchise Equipment Challenges
Acquiring equipment is the most significant challenge for anyone thinking about becoming a franchise owner. Equipment is an expensive necessity for opening or growing a successful fitness franchise, but deciding which equipment to purchase and how to finance it are daunting tasks that can delay even the most well-planned grand opening.
There are three main equipment challenges all fitness franchisees face:
- Opening a new location. Franchisees must decide on and acquire equipment for one, or multiple new locations.
- Remodeling an existing location. Franchisees must cope with the equipment costs of chain-wide changes to the interior and/or exterior of locations every few years.
- Reimaging a franchise concept. Franchisees must acquire unique equipment to accommodate rebranded aesthetics, menu items and more every decade or so.
These challenges place financial stress on franchisees, because they may be unexpected and come at a time where extra funds are scarce. While purchasing equipment out of pocket is an option, this almost always liquidates any capital set aside for a rainy day. Financing or leasing equipment, on the other hand, is a great way to manage and preserve cash flow, while acquiring the necessary assets to run a successful business.
Unfortunately, first-time franchisees often have difficulty securing an equipment lease or financing by traditional means. Banks often see first-time owner operators, particularly those in the competitive health club industry, as high-risk investments, preferring to lend to established business owners.
“Banks can love your idea and see your progress, but at the end of the day, they look at one or two factors,” said Isaiah Stanback, former Dallas Cowboy and Super Bowl XLVI champion, turned co-owner of Steadfast Fitness and Performance. “Other opportunities tried to drown us with interest rates but equipment financing gave us that boost to put us in a position to be successful.”
In contrast to bank financing, the rise of an alternative method – equipment financing – presents franchisees with ways to finance the equipment they need, while preserving cash flow. By counting the equipment as collateral for the loan or lease, equipment financing offers some of the best interest rates and payment terms out there for all types of fitness equipment, regardless of a borrower’s time in business or credit score.
While becoming a franchise owner can be challenging, those who tactfully choose the right financing solution and prepare for unexpected costs can make franchising a rewarding endeavor.
Cory Damm is the vice president of client services and general manager of the fitness vertical market group at LeaseQ, a marketplace bringing automation and efficiency to small business borrowers looking to finance equipment to start and grow their businesses. Contact Cory at firstname.lastname@example.org or (888) 688-4519 x 102.