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Bankcorp Forms SBA Alliance with Franchise America Finance

Bankcorp Bank last month announced a strategic alliance with Franchise America Finance, a subsidiary of Siegel Capital, to create a national SBA guaranteed lending program for startup and expanding franchises.

While the program will be limited to 30 franchise systems with measured performance and experience in operations, Bankcorp said it expects to generate a “substantial amount” of SBA-backed loans through the alliance. “We are focused on lending to only the best of the best in franchising,” said Diane Gallion, senior vice president of Bankcorp Bank. She recently joined the bank to establish its government guaranteed lending program.

The program could help fill a need in the lending arena. While the lending market is improving, both for conventional loans and for SBA-backed loans, startups continue to have a difficult time finding funds as banks shy away from borrowers with little business experience.

Franchise America Finance was formed by a group of franchising professionals to address the void in capital markets. FAF provides senior and subordinated debt, mezzanine financing and place equity for franchisors and operators. “This program is the first of its kind, providing a collaborative effort between lender and franchisor to set up a predictable model of franchise financing,” said Ronald Feldman, CEO of Franchise America Finance.

Roark Capital Group Buys Wingstop

As yet more proof that the mergers and acquisition markets — and financing — has returned, the Texas-based chicken wing chain Wingstop was sold to private equity firm Roark Capital Group for an undisclosed sum. The deal is one of a sudden spate of recent private equity acquisitions in the franchise restaurant space, including the recent sale of Papa Murphy to Thomas H. Lee & Partners.
GE Capital and Wells Fargo financed the deal, which has been in discussions for four months, said Wingstop CEO Jim Flynn. Gemini Investors, a major owner of Wingstop, had started looking to sell Wingstop in 2008, but held off after the recession cut prices in the restaurant space.

The deal gives Roark its seventh restaurant chain — the company also owns Cinnabon, McAlister’s Deli, Moe’s Southwest Grill, Seattle’s Best Coffee, Carvel and Schlotzsky’s Deli. It also gives Roark a high-growth concept. Wingstop, one of the fastest-growing restaurant chains in the country, has 650 units and more than $300 million in revenue. It has had 27 straight months of same-store sales growth.

“We love the simplicity of the operation,” said Erik Morris, managing director at Roark, who worked on the deal. “They know what they do well and they deliver on it. They’ve grown very nicely, and there’s a lot of opportunity to continue to grow the brand in existing and new markets.”

Flynn will remain as CEO, along with the rest of senior management. “We picked a good group of people,” Flynn said of Roark. “They have good restaurant experience. Everything we’ve seen and heard from them has been good.”

Flippers Launches Franchise Program

Flippers Pizzeria, the chain of Orlando-based brick-oven pizza restaurants, has launched a franchise program to expand its concept throughout the country. “It seemed like the next logical step; the company stores were doing really well,” said Ian Schneider, Flippers’ VP of franchise development. Schneider mentioned that the 10 existing company stores were recently redesigned under the guidance of branding and design firm Chute Gerderman, giving the company’s logo, packaging, brand language, sinage and interiors a face-lift.

The new décor also highlights Flippers’ main ingredients, such as oversized cans of tomatoes and bottles of extra virgin olive oil. Schneider believes the franchise program will succeed based on the restaurants’ “unique, multi-daypart” nature.


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