When creating a project, it is generally necessary have a certain contribution to supplement the bank loan. However, it sometimes happens that the entrepreneur does not have the resources and is forced to turn to other financing tools such as love money, honorary loans or even crowdfunding. In the case of the creation of a franchise project, this last alternative may very well be suitable to supplement your classic bank loan!
Read also: The participatory franchise: definition, advantages and disadvantages!
What is crowdfunding?
Crowdfunding, also called crowdfunding, is a financing solution for the creation, takeover or development of an activity.
It’s a solution increasingly used in addition to other financing tools such as honor loans, bank loans, micro-credits… but is also a means of building up around oneself a community that supports us.
Crowdfunding France (FPF) defines crowdfunding as follows : Crowdfunding is a fundraising tool operated via an internet platform allowing a set of contributors to collectively choose to finance identified projects directly and in a traceable manner.
This type of funding is intended for creators, buyers, entrepreneurs and associations who do not have the necessary funds to implement their business creation, takeover or development project, and who are in one of the following cases:
- They don’t want or can’t use a banking institution
- They are looking for a solution to complete their financing plan
- They want to test their project on the market by building a community of customers or potential users
Franchise crowdfunding
The crowdfunding has long concerned very small businesses but is gaining more and more interest from franchise networks. Many franchisors actually opt for this formula to accelerate their development.
More crowdfunding is also a very interesting solution for future franchisees not having sufficient funds to create their project. This alternative is very popular, on the one hand, because it allowsget funds fairly quickly and, on the other hand, because it is obtained without a deposit, without personal guarantee and while having the possibility of repaying in advance, without penalty.
Thanks to crowdfunding, franchisees can collect 2,000 euros per lender, for loans with interest on platforms approved as crowdfunding intermediaries (IFP), and 5,000 euros for interest-free loans.
A franchisee can expect to raise up to 1 million euros for his project, over a period of one year.
Crowdfunding is growing strongly in France
According to the Mazars barometer, published in February 2020, the crowdfunding sector has experienced strong development in France to become part of the corporate finance landscape on a long-term basis. In 2019, he even recorded record numbers with + 56% growth in funds raised, or 629 million euros.
Always according to the same barometer, alternative financing platforms are taking an increasingly important place in the savings and daily life of French people. In total, 1.4 billion euros in funds were collected in 2019 across all categories (crowdfunding, business loan funds, online jackpot and embedded solidarity).
In 2019, we also counted 768,728 jackpots (of any kind: birthday, departure party, wedding, etc.), 19,954 projects financing participatory and 526 projects on-board solidarity (rounding on salary, rounding on receipt, etc.).
The alternative financing for companies increased by 42% compared to 2018, with projects increased to 64% by companies.
The barometer also revealed that all sectors of activity are concerned today, from the most traditional to the most innovative, and more particularly the real estate sectors (57% with 328.3 million euros), followed by the environment and renewable energies (16% with 92.2 million euros), then shops and services (10% with 57.6 million euros).
Read also: Financing and franchise: What you need to know!
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