Before you seek your franchise financing you will want to have a clear estimate for the total amount you will need to borrow for your new venture. The following categories should help you to put together a realistic financing estimate.

Location Related Expenses

Property Leases for your tanning franchise, security deposits, monthly lease fees. Purchasing a property include the facility and any land associated with the property combined with yearly taxes. Utilities costs, deposits, signage and licenses. Any renovation costs or site modification costs.

Equipment

What are the total equipment costs to get your franchise up and running? How much do the tanning beds cost, air conditioning unit and fans?

Operating (Working) Capital

Typically the tanning franchise company will require a certain amount from you.

Interior Decorations

Costs associated with revamping your tanning franchise location’s interior and getting it up to franchise standards with the necessary colors, look and fixtures.

Inventory

How much inventory will you need to keep on hand (lotions, stickers, googles)? What are the costs associated with this inventory? Ask your frachise provider what you’ll require in this area.

Last Year Consumers Spent Over $4 Billion at The Tanning Salon
Now, [...]

Amortization – To provide systematic equal amounts of money in order to replenish the full loan amount.

Asset – Something of value against which you can borrow money

Balloon – When the final payment in a loan is greatly higher than prior payments.

Cash flow lending – When a bank provides a loan based solely on the cash flow of the borrower.

Collateral – Assets a borrower provides the bank with as security to ensure loan repayment. If borrower defaults on loan, the collateral assets are the bank’s property.

Debt financing – borrowing another person’s money and paying rent for using it.

Demand loan – A type of loan where the bank can force the borrower to repay at any given time.

Equity financing – selling a part of your ownership therefore relinquishing some control.

Interest – The cost of borrowing money, expressed as a percentage of the total amount.

Lien – An example would be the security interest earned on a mortgage. Something a creditor will claim on property.

Principal – The dollar amount of a loan where interested is owed.

Secured debt – is debt that is attached to a reasonable amount of collateral.

Security interest – [...]

Discover tips for success from real franchise owners by reading the following interviews. Coming soon – here is the list of questions the franchisees will answer.

Tanning Salon Franchise Interview Questions

What interested you most about starting a tanning salon business?
What would you was instrumental in helping you to finally take the plunge and seriously pursue the opportunity?
Did you purchase a franchise or did you decided to open a privately owned shop? Why or why not?
What 3 things would you identify as critical towards the success of your tanning salon?
Why did you choose to own a part of this particular tanning franchise company?
From start to finish, how long did it take (how long was the process) to open this business?
What was the most difficult part of starting and/or operating this type of business?
Do you have a large repeat customer base? If so, how do you keep them coming back?
Do you make most of your profits on tanning bed packages or the products (lotions) you sell? Is there a common ratio of services sales to product sales that the industry strives for?
Have you noticed any seasonal trends with tanning? (Do people tan more in the summer or winter?) If so, how do you [...]

Despite the Department of Commerce having proclaimed the success rate of franchises to be 90% compared to other small businesses success rate of only 40%, you will still find it difficult to borrow money to start your franchise.

Tanning salon franchises require a large initial investment and liquid capital available for the franchise company to use as insurance. There are several different ways to attain the capital needed to open your tanning salon franchise. You can obtain a loan from the bank or family and friends.

A bank tends to be more difficult to borrow from than family and it also charges a higher interest rate. However, most families do not have a large amount of money to spare. You can also use your credit card, but you must watch those high finance charge rates.

If you are unable to secure a loan or use your credit cards as equity, then you should try reaching the United States Small Business Association. The SBA offers guarantees on 90% of loans up to $155,000 and 85% of the remainder up to $750,000 total. The interest rates on these loans vary but [...]

The concept of “franchising” or licensing operators originated decades ago. As of 1992, one out of every twelve businesses was a franchise. Franchising allows any qualified person, with the right amount of capital investment, to own and operate his or her own business. Franchise owners are able to gain profit by using an already established brand name, implement a proven system of operations, receive guidance and consultation on personnel, training, audits and controls, and follow a successful marketing plan created by the franchise corporation.

Why buy a tanning franchise?

There are many reasons to purchase a tanning salon franchise. One of the major reasons is the support you will receive from the corporate office as far as technical issues, purchasing decisions, employee training and certification and marketing support. While there are no guarantees in business, having support from a well-known franchise operation will greatly increase your chances for the successful operation of your new tanning salon.

Tanning Salon Franchises Help their Franchisees with:

Real estate support
Permitting
Construction supervision
Tanning equipment
Lower purchasing priced on tanning  products
Inventory order
Advertising & marketing support
Comprehensive employee training & certification
Custom financing options from a Third Party
Site [...]

The average new tanning salon franchise owner will borrow some of the money needed to open their store. However, it is important to note that a franchise owner should not borrow all of the money, as they do not want to risk dependency on the market’s lows and highs. Another reason for not borrowing the total cost is to keep money and assets for the rough times ahead.

A franchise owner will also want to grow their business and to do so you will need money. In order to grow the franchise, new employees are needed and possibly new equipment. Then of course, if the franchise is successful, the franchise owner will want to open more shops. All of this costs money, and more than likely will require some degree of financing.

The first step is to gather all the information you can about tanning franchises. Search for a few tanning franchises in your area and visit their locations, hang out, and try their beds and lotion products.  This will help you get a feel for the overall concept of the tanning salon franchise.

Try to visit at least three different Tanning franchise locations and speak with the owners. Interview them as if you were a student trying to do a school project on Tanning Salons and Tanning franchising. Ask how their profits are, if they are happy with the franchise they chose, what is the most difficult part of their job and what was their first step in opening their shop.

The answers to these questions will give you a better idea of exactly what it takes to open a Tanning Salon and the store visits will give you a feel for which tanning franchises you like and might like to own.

The next step would be to request information from a franchise you are interested in to discover what their particular start up costs are and initial investment requirements. [...]

The tanning industry has more that doubled over the past 10 years.  It is estimated that 30 million Americans visited a tanning salon.  In 2004, the Tanning Industry grew to an approximately $5 billion dollar industry from its humble $900 Million annual sales in 1991.  This growth is attributed to Americans being concerned about their appearance and their health.

Although some experts say that indoor tanning is harmful, many believe that indoor tanning is a safe way for people to tan without burning.  Tanning Salons have their employees trained to identify skin types and how their skin will react to the Ultra Violet light so they can teach people how to avoid sun burns.

Sun burn prevention outdoors is much more difficult than indoors due to uncontrollable variables.  In theory, tanning indoors will be the same amount of UV light every time.

The initial franchise fee for a tanning salon franchise capital will generally cost anywhere between $30,000 – $80,000. Franchise fees will vary depending on which tanning franchise brand you choose.

Tanning salon franchises will typically require approximately $60,000 – $100,000 of liquid capital.  The total capital investment can cost anywhere between $75,000 – $500,000.  Try not to get too concerned with the costs as most franchises will help you with a third party financing option.

These are simply general figures to give you an idea of what it could cost to start your own tanning salon franchise. To gather more specific information on the initial investments and start up costs, you should request information from the tanning salon franchises you are interested in owning.

Many wise people have said that the most important thing when opening a business is location, location, location! This old adage is still true today as location is a key success factor in operating a tanning salon. Most tanning salon franchises will help you in determining the perfect location for your shop.

However, it is important to note that climate does not seem to be a factor. People in cold locations want to stay tan and benefit from the UV rays benefits. People in warm weather also want to stay tan but do not have the time to sunbathe for 4 or more hours.

The other location factors are things such as population demographics, what type of businesses are around, the traffic on the street you are located and much more. There is so much to consider when choosing the perfect location, which is why many people buy a tanning salon franchise. The tanning salon franchise corporation provides help that can make the location decisions much easier.  They have a proven formula for selecting the best locations as well as other factors.