The Internicola Law Firm, P.C.

Solutions for an Undercapitalized Franchise in New York

If you plan to franchise in New York, and your business is undercapitalized, then a state administrator may deny your franchise registration. If this happens, then the solution may be to capitalize your franchise in New York. To secure additional capital that will satisfy your needs, you will have to secure a long-term loan. 

Unfortunately, under New York franchise capitalization requirements, a short-term loan will increase your assets as well as your liabilities, and therefore will not improve your working capital. By securing a long-term loan that is not repayable for a minimum of 12 months, you can improve your business capital. This long-term loan can come from an officer or a stakeholder in the New York franchise.

Another solution for your capital needs may be to defer your initial fees. If you agree not to demand the initial fees until your New York franchisees open their business, the state may approve your registration. This will assure that you won't use these initial fees to fund your business before fulfilling your pre-opening obligations.

Other solutions to your New York franchise capitalization needs include: 

• a guarantee of performance;
• a surety bond; or
• an informal undertaking. 

If you plan to franchise in New York, the state will require you to meet the franchise capitalization requirements. These requirements are to ensure that you have enough money to support your franchisees. A New York franchise attorney can advise you on the franchise capitalization requirements, and what alternative may work for you if your franchise in New York is undercapitalized.

Contacting a New York Franchise Attorney

If you are an entrepreneur who is interested in franchising your business there is a lot you need to know, including the significance of evaluating your trademark and how to approach the preparation of your Franchise Disclosure Documents. For a limited time, get New York franchise attorney Charles N. Internicola's franchise law report to determine whether your business is right for franchising. Contact us today at 800-976-4904 for more information about Mr. Internicola's franchise law services in New York and how he assists entrepreneurs franchise their business nationwide.