Business 6600 Essay, 700 words, APA format, 3 references (Krispy Kreme)

Now that you have a good idea of what is required to start a franchise, consider where the money would come from. ;Specifically, what would be the cost to borrow the money to start a franchise? ;For this discussion, read the posts from Part 1 and note the costs to start three different franchises. ;If someone wanted to borrow those amounts of money, what would be the total amount they would pay back? ;Assume that the borrower had good credit and could get a business loan for 5 years at 5%. ;What would be the amounts borrowed and paid back if the loans were for 10 years at 6%? ;How about 3 years at 4%? ;(example, borrow $10,000 at 6% compounded monthly for 9 years requires a total repayment of $12,966.19)

Once you get a good look at how the length of the loan and the interest rate affect the total amount paid back, consider that a startup business rarely makes money in its first year. ;To start the business, you would probably need at least a year’s operating expenses, in addition to the cost to start up the business.

Provide a summary of the above analysis on one of the franchises you considered. ;Is this what you expected, or is the amount much higher or lower than you thought it would be?

You can use online calculators for the bulk of the math above. ;There is a good set of online financial calculators at ;http://tcalc.timevalue.com (I used their Fixed Rate Mortgage Calculator with the “Home price” being the amount you want to borrow, the “Down Payment” of 0%, a “Loan Term” of 9 years, and an “Interest Rate” of 6.000%).

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Students ;answer to relate this essay off of:

;I chose to research the ;Krispy ;Kreme ;Doughnuts ;Corp. ;and the requirements needed to open up a new franchise. ;I found that it would take anywhere from $275K to $1.9mil to open your own Krispy ;Kreme ;franchise, depending on the size of the location. ;The company requires applicants to have $1million in assets and a minimum net worth of $2million. ;The company does not offer financial assistance to prospective franchisees. ; ;

; ;With a total investment of roughly $2million and a approximated 20% return on investment, I feel this is a low risk-low reward franchise. ;The business is always steady but there are hardly any peak times of business. ;Krispy ;Kreme ;Doughnuts ;seem to only peak when the location is fresh and new. ;Once customers get over the hype, the business will level off. ;I think this franchise is searching for franchisees that are already established and in that case, the franchisee can be patient and allow the business model to create profits after 1 or 2 years.