Papa Murphy's Gets A Financing Boost



Papa Murphy's wants to take its growth to another level. The Vancouver, Washington-based take-and-bake pizza concept recently inked a $7.5 million credit deal with Franchise America Finance that will provide qualified operators with a quicker source of financing to accelerate the company's growth in coming years.

"In this new era of financing, securing good sources of financing for franchisees is critical for companies looking to grow," said Kevin King, Papa Murphy's chief development officer.

Papa Murphy's has demonstrated consistent growth even through the worst of the recession and is among the most well regarded pizza franchises in the country, based both on the reputation of its franchise system and of its pizza, which has received high ratings from Consumer Reports, Zagat and others. The 1,350-unit concept also has a relatively low initial investment, about $265,000. It was the No. 104 franchise on the most recent Franchise Times Top 200.

Still, the company's franchisees have struggled with financing, like many other franchises, since 2008. And though King said that financing has improved, it hasn't come all the way back yet. "Even with that improvement, it has become a lot more detailed and documented," he said. "Everything takes longer."

Under the deal with Franchise America Finance and The Bancorp Bank, Papa Murphy's is pre-qualified as a franchise for up to $7.5 million in loans to franchisees. Qualified franchisees can then get a financing commitment within a week. It's not a full loan approval, King said, but it's a quick letter of intent. "The rest is up to how quickly the candidate can pull together everything that they need to get loan documenting," he said. A growing number of franchise systems have similar deals with FAF, including some of the most well regarded concepts in the country, such as Moe's Southwest Grill, Wingstop, Jersey Mike's, Maaco, Massage Envy and others. The lending program was created in 2010 and now has deals with 30 systems.

"It's meant to give the franchisee comfort," King said. He also believes the financing deal will help speed the company's growth. Papa Murphy's wants to add 100 more units domestically next year. He believes that having a credit deal like this one that speeds the financing process will give the company a competitive advantage as it seeks out new franchisees. "Franchise prospects are looking for brands and companies that have programs like this that make the decisions easier," King said.

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News, notes and commentary on franchise financing, including SBA lending, both the SBA 7(a) program and the SBA 504 program, franchise finance programs, development incentives, big deals and startup lending.

  Mary Jo Larson is the publisher of Franchise Times Magazine and its sister publication, the Restaurant Finance Monitor. She is a frequent speaker at meetings and conferences, and at the Restaurant Finance & Development Conference. You can find her on Twitter at @mlarson1011.
  Reporter Jonathan Maze covers restaurants and finance for Franchise Times. He also writes for our sister publication, The Restaurant Finance Monitor, and writes a daily blog on the restaurant industry at www.restfinance.com. You can also catch him on Twitter at @jonathanmaze.

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