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How 10 franchises help ‘zees gain financing


John Metz

We asked the 40 brands on our Fast and Serious list to describe financing assistance they provide to franchisees. Their responses ranged from minimal help to monumental. Here are samples, in their own words.

  1. Anytime Fitness has a finance director who consults with each incoming franchisee on both a personal financial review and planning, and sorting through financing options that best fit each situation. There are many financing options franchisees may choose, but the franchisees make the final decision on which path to take. Having the education and support system in place by the franchisor makes their decision less daunting and ultimately just another step in the process.
  2. While not a lender, Batteries Plus Bulbs has established relationships with lenders familiar with the concept and business model. Additionally, to support store development in California, one of its targeted markets, the brand offers significant financial support for new owners through its California Development Incentive Program. This program is designed to address the cash flow aspects of a new store start-up and allows for payment deferments, cash contributions and operational cost subsidies to ease the cash flow burdens common with any new business. The program has been well received and the brand expects to see more potential franchisees take advantage of this offer in 2015.
  3. Black Bear Diner has developed lending relationships over the years. The brand introduces franchisees to these lenders who are very aware of Black Bear Diner. They understand it, they know the leadership and operating team, and so are willing to help franchisees in their growth needs.
  4. Buffalo Wild Wings does not suggest any financing programs, although it occasionally researches potential competitive lending sources for franchisees to consider for key capital projects. Its goal is to provide franchisees a list of potential lenders who are familiar with Buffalo Wild Wings capital projects and who also offer competitive rates and repayment terms. The franchisee can explore those options or simply use a preferred lender of their own.
  5. Freddy’s does not directly provide financing to franchisees, but there are several lending institutions that remain familiar with the Freddy’s concept, and the growth and performance of the system. These lending institutions are happy to quickly assist Freddy’s franchisees with financing. Additionally, Freddy’s franchisees are fully aware of the capital requirements for operating and growing in their respective markets. Many have garnered experience from work with other national chains, and can directly apply that knowledge to the development of the Freddy’s concept.
  6. GolfTEC provides detailed information on its franchise business, its earning claim showing sales since inception, and budgeting/modeling software to help create a business plan to present to a local financial institution.
  7. Hurricane Grill & Wings put together a $5 million pool two or three years ago, through Mount Pleasant Capital, and then added a second $5 million pool, to guarantee loans. “If the operator defaults, then we have to step in and make the payments, or take over the unit and see that it’s sold,” says CEO John Metz. Metz is also a large Denny’s, Dairy Queen and Marriott franchisee, so he believes it’s a must for franchisors to back franchisees this way. “Now you’re touching a nerve,” he says, when asked why relatively few franchisors do this, and he thinks it’s a red flag “if the franchisor is not willing to put his name on it. I think it’s the right thing to do. Why should the franchisee take a 100 percent risk?”
  8. Jersey Mike’s has long-standing relationships with many regional and national lenders, and provides franchisees with a portfolio of preferred lenders across the country.
  9. Smashburger does not have a system that provides franchisees with a program to obtain financing, but it does have minimum assets and net worth requirements that must be met prior to applying to be a franchisee. Most of its franchisees are multi-unit operators who already have access to financing without franchisor support.
  10. Tropical Smoothie Cafe has committed $20 million to franchise expansion through a financing program that provides qualified existing franchise owners with loans to cover 80 percent of store development costs, including franchise fees, equipment, signage and other expenses related to opening. Since the program’s launch in 2014, Tropical Smoothie Cafe has approved $2.6 million and funded $1.7 million to develop 10 locations. CEO Mike Rotondo says the funding is for existing franchisees. “So if you’re a part of the brand, we know you and we love you, but maybe your credit score isn’t high enough for the SBA, chances are we’re going to take a chance on you.”


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