Give 'em comfort: Franchisor outlines his concept for the banks
Bin There Dump That, a "residential-friendly" dumpster franchise, received the rare opportunity to get in front of a group of lenders to give an overview of the concept. What was interesting was the information they decided to reveal to the 50 lenders and banks that were dialed in.
In a recent webinar put on by BoeFly, the online marketplace that connects franchisees and their loan applications to lenders and banks nationwide, Franchise Recruitment Manager Stephen Hogan told the Bin There Dump That story. Mike Rozman, co-president and chief strategy officer for BoeFly, said it is an opportunity they offer all franchisors who are BoeFly clients. Hogan's delivery was impressive, mostly because he went step by step in giving the lenders comfort on the stability of the franchise and the probability of success of the franchisees they may fund. Here are some of the points Hogan covered, which could be a blueprint for other franchisors giving pitches to capital providers.
• Established a history of the company. Parent company That Franchise Group owns five brands and has been in business for 42 years. "That says a lot about solvency, about integrity, and understanding risk."
• Talked about franchisee success rate. Starting in 2004, the company grew to 35 franchises in Canada before considering expansion in the US. In 18 months, they've awarded 18 franchises, 15 of which are open. "We have a 95 percent success rate," said Hogan. "Only three have closed since our inception in 2004." And there's been no litigation from franchises and no SBA charge backs, he added.
• Established a clear differentiation from others in the marketplace. The competition is the one-man shop and is fragmented, "with zero customer service. Hogan talked about employees being neatly dressed and clean, how they approach the driveway—not dragging the dumpster across the driveway, but hydraulically lifting it—and sweeping the driveway after they remove the dumpster. "It shows respect for their property," he said.
• Revealed the company culture that is focused on franchisee success. Each member of the executive team is a current or former franchisee, so they understand what franchisees experience on a day to day basis with their business.
• Talked about "awarding" franchises rather than selling them. A lot of franchisors talk this up, the difference between the two. Bin There Dump That is no different, but Hogan's description of what it takes to become a franchisee did sound like it was more onerous than some other brands.
• Listed the ongoing support the franchisor offers. From a "business 101" class and assistance in purchasing the equipment to monthly site visits and daily, weekly and monthly contacts to "ensure no one falls through the cracks," Hogan listed each and every way they support the franchisee.
• Outlined the exact costs for the franchisee, and breakeven predictions. Hogan listed the exact franchise fee, the flat fee each franchisee pays per truck (rather than a royalty percentage), and how many months, on average, it takes a franchisee to break even.
• Explained how the franchisor markets the franchise to consumers. Bin There Dump That pays for features in HGTV's Property Brothers and Holmes on Homes shows, but also works with the franchisee on local marketing.
While we're sure there are risks with every franchise, it was Hogan's job to make lenders see the validity, and the opportunity, of their concept. And that he did.