Representative example: Jillian buys a cleaning franchise
Jillian has been working independently as a cleaner in Ontario for about 5 years but has found herself struggling to compete with the larger, franchised cleaning services that have begun offering services in her area. After reading about the benefits these franchise owners receive – including liability protection and free marketing – Jillian decides to quit working independently and purchase a franchise of her own.
Besides paying $500/month in royalties, she’ll have to pay a $35,000.00 franchise fee + 13% HST upfront. This includes the base cost of the business, a transfer fee for reviewing her application and orientation/training costs. While Jillian feels confident her existing clientele is large enough to cover the monthly royalties, she needs help paying the franchise fee and sales tax.
Jillian applies for a business loan from an online lender. Thanks to her solid credit score, she is approved for a loan of $39,550.00 with competitive terms. She signs the loan documents, and the funds are deposited into her account within 2 business days. Note that, as a GST/HST registrant, Jillian can treat the HST she paid as tax deductible on her next business tax return.
|Cost of purchasing a cleaning service franchise||$35,000.00|
|Loan type||Business loan (term loan)|
|Interest rate (APR)||7.90%|
|Loan term||5 years|
|Additional fees||Origination fee of 3.00% ($1,186.50)|
|Total loan cost||$48,002.40|
*The information in this example, including rates, fees and terms, is provided as a representative transaction. The actual cost of the product may vary depending on the retailer, the product specs and other factors.