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If you’re a franchisor, reading this can save you $500! Franchise Matchmaking event will open the door for franchisors and franchisees seeking money.
Once upon a time, several large national lenders were eager — and quick — to lend money to franchisees for start-ups and expansion of their businesses. But no longer.
No national lending
“Today, there’s not one national lender that will take care of a franchisor’s business across the country,” explains Bob Coleman, founder of Coleman Publishing, an online media company that covers the small business banking industry, with an emphasis on franchising.
But there is money to lend
But that doesn’t mean lenders aren’t willing to lend to franchisors and franchisees anymore! “Small business lending is down by 35% in 2009,” continues Coleman, publisher of the Coleman Report, a newsletter that covers SBA’s lending programs. “However, lenders are gearing up for 2010 and beyond. The economy is improving and lenders are now looking for appropriate opportunities.”
In fact, there are new lenders who know little about franchising, but need to. If they want to lend to franchisors and franchisees they’re forced by new banking regulations to learn about franchising.
Restrictions on lending
“The main reason there are no national franchise lenders today is because the regulators have put restrictions on lending,” explains Coleman. “Lenders now must have a presence in the market where they plan to lend. They can’t be based in New York and lend to a franchisee in Wichita, for example. The bank must have a branch office in the market.
“Plus, there are other restrictions which make national lending impossible today. The regulators want lenders to become risk adverse and concentrate on building capital and net assets, which is code for ‘If you’re going to make a loan you better be sure it’s with a strong concept. If it’s a disconnect, we’ll have issues with Treasury and the Obama Administration.’ A lender is much more cautious today, but the lenders still need to be in business and they’re seeking good opportunities.”
Matching franchisors to lenders
As a result, Coleman has organized a Franchise Matchmaking event for March 3, 2010 in Los Angeles. “I’ve invited 15 lenders who want to lend money to franchise systems to come and meet with franchisors,” says Coleman. “I’m going to allow 15 franchisors to each get 15 minutes to pitch their system and their business to each lender.”
Lenders are coming from:
- U.S. Bank
- Wells Fargo
- PNC
- Preferred Capital
- United Western Bank
- Diamond Financial
- USC Credit Union
- Excel National Bank
- Mercantile Capital
- BankFirst
- HomeBanc
- And more to come!
Franchisor: You need more than one
Going forward, franchisors will need to establish relationships with multiple lenders that represent different markets of the country. “Now, instead of one or two lenders who take care of everything for a franchisor, the franchisor may need a half dozen or more lenders, depending on where they’re developing franchises,” explains Coleman. “This is more work for the franchisor.” But if it gets the job done, who’s going to complain? Franchisors are interested in opening new outlets and new franchisees, as well as existing, expanding franchisees need the franchisor’s assistance to find new money.
One word of caution: Coleman says that lenders will be interested in the franchisor’s network. “They are going to google your brand and if you’ve got issues with franchisees that will concern the lenders. You (franchisor) need to clean up those issues. If you have a problem child in your network, resolve the issue. Turn it around. The lenders will be looking at these issues and asking if you’re in business to collect fees, or if you’re really building a system.”
How you can register
Only 15 franchisors can participate in the LA Franchise Matchmaking event. The fee is $1,895. However, you can save $500 if you call Coleman and mention FranchiseMastermind.com when you register. Hurry, because the space won’t last.
Contact Bob Coleman: 818-974-8934.
Photo image by: AMagill
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