As a former franchiser founder, I was always amazed at the number of consumers who would promise me that their credit was exceptional, and they could afford to buy one of our franchises.
When I asked them about their credit they were reluctant to share the information, as well anyone should be, and they would simply say; "don't worry about it I have one of the highest credit scores possible.
" The interesting thing was that many of them did have extremely high credit scores, but they also had so much credit that they were over extended.
It's not that I want to pick on these franchise buyers, rather I would like to relate to you that attitude as a false one; it is a false argument for those buying franchises.
There is a big difference between commercial credit, and consumer credit.
Perhaps, you don't know this but the average consumer has 150% of their annual income in short-term debt.
This comes before their long-term debt such as house payments.
If someone owes that much money, it would be unwise for a business bank to lend the money to buy a franchise.
Now many of these consumers were able to go out and buy vehicles and equipment for the franchise we were selling on credit cards, they literally had that much consumer credit available.
But they could not get a business loan, and no bank would take them due to their income to debt ratio.
Too much consumer debt will prevent you from being able to purchase a franchise, no matter what your credit score is, or how good in the past you've been a paying all your bills.
It is too bad that most consumers don't realize this, because if they plan on owning a business of their own someday as part of their American dream, this will probably prevent them from ever doing so.
I hope you will please consider this.