Financial start-up aid: Funding for franchisees displayed in detail

The founding of a franchisee operation often paves the way to a self-sufficient and successful future career: With the strength of the franchisor as a continuous supporting moment and the simultaneous ability to independently design the franchise, franchising is considered one of the most promising types of self-employment. However, the establishment of a franchise operation requires a certain monetary investment in order to finance, for example, a shop and license fees. If the founder is neither in a position to pay the required amount of equity nor through debt financing, the idea is bound to fail. But such a situation is not synonymous with the definitive end of the franchise concept: state subsidies can be used where essential funds are missing. Review the following overview by Engel & Völkers, your partner in the real estate franchise, which subsidy opportunities you have as a franchisee and who offers itself as a sponsor in your situation.

State funding is also established by law for franchisees

An economy benefits from a high level of company start-up rates and implemented franchise concepts in several aspects. For example, young productive franchises encourage economic growth, and they often help diversify supply and maintain market competition. For this reason, Article 104b of the Basic Law affirms the need for financial subsidies for start-ups, including openings of franchises. The main institutional sponsor of these subsidies in Germany is KfW Bankengruppe, whose shares are held by the federal government at 80% and at 20% by the federal states. In addition to support programs for start-ups, models are also offered to promote further business development after the founding has been completed - depending on your personal situation as a franchisee, it is therefore advisable to look at the existing possibilities of subsidization. By the way: KfW Bankengruppe also has independent development banks in the federal states themselves, so it could make sense to obtain offers from different sources.

Depending on the situation: The different support programs for franchisees

Whether or not and what kind of subsidy you can count on for your franchise investment depends on your personal starting situation. In general, a distinction is made between low-interest loans, i.e. loans that you have to pay back only for a limited time, with little or no extra cost, and grants that you receive for certain eligible criteria of your franchise. Often you have the choice between different funding programs or even several institutions, which may even allow a combination of several funding models.

What matters most to your offers are the characteristics of your investment: is your industry, such as the real estate franchise, eligible for funding? Are you setting up your franchise business in a rather underdeveloped and therefore subsidized region? Are you planning to hire different groups of people whose employment will be subsidized - such as re-integrated or disabled people?

Questions such as these determine both the amount and the nature of your funding opportunities.

Since the supply field is large and the differences between individual programs are significant, Engel & Völkers advises its franchisees with technical advice when in doubt. With the right in-depth knowledge and a sector-specific information foundation, applying for funding programs is also much easier in franchising, so that your investment can be implemented safely.

Subsidized loans for franchisees: That's something to keep in mind

If the decision has been taken to get a promotion package that includes a loan, you must apply for it at your bank in accordance with the house bank principle. There you will receive all the forms you need for the application for funding from your franchise company. Your bank will assume the position of the debtor vis-à-vis the development bank, so be sure to ask for collateral in case you become insolvent. As a franchisee, you will also need a form to submit your franchise plan to the sponsor and confirm your intention to do so.

In addition, when planning, you should urgently take into account that refinancing via public subsidies is generally not provided. This means that any expenses you have incurred as a franchisee prior to the actual grant approval as part of your investment will not be funded.

As an international leader in real estate franchises, Engel & Völkers is your contact for all matters relating to franchising. Would you like to run a real estate shop yourself as a franchisee and become part of the worldwide Engel & Völkers success story? Do you have questions about financing or promoting your investment? We are happy to advise you by phone or e-mail. Do not hesitate to contact us!