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Finance

Access to capital is the lifeblood of franchise growth. Restricted lending policies of the past few years continue to be a challenge for franchisees, who need access to capital, whether to survive or expand. Lenders today are searching for solid franchisee organizations to do business with, but what exactly are they looking for? Learn what bankers, franchise lenders, private equity firms, and other capital sources want to see in a borrower - and make sure you are managing your organization in ways that make you attractive to lenders.

Learn more about the franchise finance and capital marketplace, and what factors are affecting your chances to borrow the capital you need to grow.

Feature Story:

Fair Wage War: IFA Takes Its Minimum Wage Battle To Chicago »

Multi-Unit Franchisee

Fast on the heels of its recent legal challenge to a new minimum wage law passed in Seattle, the International Franchise Association (IFA) has now set its sights on the city of Chicago.
Steve Caldeira, president and CEO of the IFA, wrote a letter to the Chicago City Council and Mayor Rahm Emanuel last week urging them to remove a provision in a bill to raise the minimum wage that would discriminate against franchisees.
Caldeira and the IFA have been clear in their assertion that franchisees are locally owned, small businesses and not large, national businesses as the legislation suggests. Giving non-franchise small businesses extra time to increase their wages, but forcing franchisees to raise their wages along with large companies is unfair and unconstitutional, says Caldeira...

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Hunting For Funding: How Alternative Lending Can Boost Your Business »

By David Goldin

If you've had issues financing your franchise, you're not alone. Like any business owner, you need money to take care of everyday costs like paying property taxes, meeting payroll, or purchasing inventory and equipment. But what happens when you walk into a bank and are denied funding because of a low credit score or insufficient collateral?
This is a problem all too common for business owners these days. Following the recession of 2008-2010, government regulations forced banks and other lenders to significantly tighten their requirements. These restrictions effectively shut out many businesses from acquiring funding.
So what can franchisees do to receive the funding they want? The answer lies within alternative lending.
Since the financial crisis, alternative lending companies have begun to take the place of more traditional lending options...

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Emotional Investing: Keeping Your Emotions From Dictating Your Financial Future »

Multi-Unit Franchisee

You've probably heard of emotional eating, but financial advisor Matthew T. Shafer says emotional investing is a problem that needs to be recognized society-wide, especially since the economy has been in such sharp focus this past half decade.
"The words of an experienced mentor have proven to be spot on throughout my career; he said that no matter how smart they are, most people don't know what to do with their money," says Shafer, named one of the top 1,000 financial advisors in the U.S. by Barron's Magazine.
"It wasn't that people were ignorant, and it wasn't that they were incapable of analyzing investment opportunities. The challenge occurred when emotion clouded their judgment."
People become too optimistic and enthusiastic when their investments are on the rise, and too fearful and skeptical when they see a decline, he says...

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The Profit Mastery Road Map: Improve Your Profitability And Cash Flow »

By Steve LeFever

Mysteries are solved when we use clues to find the culprits behind the crime. Financially speaking, when the crime results in the untimely demise of a business, we often see three usual suspects: low cash, low gross margin, and low net margin.
But low cash and low margins are caused by something. The diagram presents a big picture overview, but also can lead us through a clue-by-clue, cause-and-effect deductive analysis designed to pinpoint potential financial culprits. When combined with industry benchmarks, this diagram can become your personal roadmap to success.
First, how to read it. Between any two boxes, in the direction of the arrows, insert the word "causes." In other words, "low cash" causes "high borrowing." Now, if you work against the arrows, include the words "is caused by" between the two boxes...

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Retirement Advice: Expert And Software Creator Shares Tips For Calculating Retirement Withdrawal »

Multi-Unit Franchisee

"Who has my back in retirement?" That's the question pre-retirees and retirees want answered when it's all said and done, says veteran financial planner David Zolt.
Baby boomers have been retiring in droves in recent years, and will continue to do so throughout the next decade - 10,000 of them a day, the Pew Research Center estimates. Unfortunately, the average boomer is about $500,000 short on their savings, according to a recent survey by TD Ameritrade.
We have already entered an unprecedented moment in retirement history; never have so many people, with such variability in financial wealth, retired at once, says Zolt.
"Clients want to know when they can retire, how much they can withdraw from their savings, and how confident they can be that they won't outlive their money," says Zolt, who created retirement income planning software for financial advisors...

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Ratios Rule!: But Do You Know Which Financial Ratios To Watch? »

By Steve LeFever

In earlier articles, I have discussed your two key yardsticks of financial performance: the balance sheet and the income statement. Taken together, they represent as complete a financial picture of your company as it's possible to get.
Now, it's a common practice (and a sensible one) for businesses to have at least two sets of financial statements (or maybe three): one for the IRS (with the tax rules and regulations making net profit look as small as possible); one for your banker (adjusted to present the most glowing picture of the business); and one for yourself. But remember you can't fool all of the people all of the time. And the worst possible person to fool is yourself. You need clear, concise, decision-relevant information.
Incidentally, two or three sets of statements does not imply more two or more sets of books (the general journal and the general ledger, which report all financial events that occur in the business)...

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Your Own Worst Enemy?: 5 Ways We Sabotage Our Financial Affairs »

By Carol Schleif

Investing wisely does not come naturally to most of us.
Many of the skills that support ultimate financial management success run counter to how our natural wiring prompts us to behave. Sound long-term investment decisions often require the ability to make choices that differ from near-term "prevailing wisdom." But we are social creatures, most comfortable when we fit in.
We crave predictability, but the markets are unpredictable and random. We infer short-term "patterns" reinforced by what we just read online, but don't recognize long-term sea changes that evolve with subtle nuances. We love to share stories, but often find it challenging to grasp complex financial and mathematical relationships. And we are irresistibly drawn to what is happening in the here and now, often refusing to focus on what may or may not come to pass some time in the distant future...

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Retiring To Grow: Benetrends CEO On How Franchisees Can Finance Growth »

Multi-Unit Franchisee

Retiring To Grow: Benetrends CEO on How Franchisees can Finance Growth

It's not uncommon for entrepreneurs and business operators today to tap into their 401k or other retirement accounts to seed growth and expansion. This holds true in franchising as well. If you're a multi-unit franchisee considering how you might use your 401(k) to expand your operation you probably have questions.
We asked Rocco Fiorentino, CEO of Benetrends, to explain how the process works, the pros and cons, and legal implications. Benetrends has more than 25 years of franchise industry experience helping more than 10,000 entrepreneurs to fund their business over the last 30 years. Fiorentino shares the most common questions franchisees have asked about financing growth...

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Stick To Your Principles!: 9 Tips For Maintaining Balance In Your Investments »

By Carol Schleif

A few months ago, the Wall Street Journal ran a front-page story detailing how it's legal for nongovernmental providers of key data series, such as the University of Michigan Consumer Sentiment poll or the Purchasing Managers' Index, to release customer research reports early to those willing to pay for it.
Research reports can move markets, and those who get the business intelligence in advance can make millions from receiving this information early. What's striking is that the early information is received seconds before public release--not minutes, hours, or days--and they're still profiting mightily.
This phenomenon is not unlike what's happened in the investment business over the past several decades. Daily trading activity today seems to be dominated by those with hundreds of billions in assets under management, computer-based trading systems, and media-induced "noise"; even as the average time between an asset's purchase and sale has shrunk from a couple of years to a couple of months...

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Cash Flow: The Time To Manage Better Is Now »

By Steve LeFever

Check your business for these 20 danger signals!
To most financial advisors, convincing their clients of the absolute necessity of maintaining a sound financial system and cash controls—and the need to consistently review, evaluate, and plan—is about as easy as selling first aid. Everyone knows it’s there, but we can always “do it later.” Besides, “It won’t happen to me.” Or, “So what? I don’t have any control over all that stuff.”
You’re right, you don’t. However, what does this mean for individual businesses? The loud and clear message here is “manage better.” When there’s less room for error, you must do a better job.
As business owners, we have faced the ups and downs of economic cycles—and probably always will...

Feature Story:

Beware Of IRAs And Annuities »

Multi-Unit Franchisee

Experts share tips and warnings for investors

IRAs and annuities are growing in popularity as retirement investment options, according to recent surveys, but three financial experts warn they can have serious disadvantages.
"Last year, four out of 10 U.S. households had IRA accounts-that's up from 17 percent two decades ago," says CPA Jim Kohles, chairman of RINA accountancy corporation, (www.rina.com), citing an ICI Research survey. "But they can be bad for beneficiaries if you have a very large account."
Investment in annuities, touted as offering a potential guaranteed income stream, also continue to grow with sales up 10 percent in the second quarter of this year.
"Annuities have several dark sides, both during your lifetime and for your beneficiaries," says wealth management advisor Haitham "Hutch" Ashoo, CEO of Pillar Wealth Management, (www...

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Integrity And Rewards: Former Partner Shares Life Lessons From The Rise And Fall Of Arthur Andersen »

Multi-Unit Franchisee

Larry Katzen made partner at Arthur Andersen by the time he was 30. The "Big 8" accounting firm had a long reputation for innovation and integrity. The firm continued to soar, with an emphasis on continuing education for employees and meticulous attention to detail, it was one of the most trusted accounting firms in the industry.
Katzen enjoyed a fast-paced rise through the ranks, all the while learning, traveling, and parenting quadruplets with his wife and college sweetheart, Susan. It all came crashing down in 2002 when the company was indicted based on false accusations having to do with the scandals at Enron. With the firm's survival in question, Katzen moved quickly to encourage employees to carefully complete all remaining assignments...

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Can Money Buy Happiness?: 3 Tips For Changing Your Attitude Towards Wealth  »

By Doug Vermeeren

Although we live in the richest and most advanced society the world has ever known, many of us say we need more money in order to be happy, notes best-selling author Doug Vermeeren.
"Even some of those in the top percentile of earners often feel like they don't have enough money," says Vermeeren, an international speaker who consults with celebrities, business executives, and professional athletes.
"The math is simple: More money does not equal more happiness. It's our attitude toward money, not the amount, that influences our happiness the most."
Happiness researchers Elizabeth Dunn and Michael Norton, professors at the Harvard Business School, recently published research indicating that it's not money that makes people happy, nor the things people buy with it...

Feature Story:

Get It In Writing: Do You Have A Written Income Plan For Retirement? »

Multi-Unit Franchisee

"Age 85 is a bad time to go broke," says retirement planner Jeff Gorton. Personal savings, various investments and, yes, Social Security may prove to be short of what you'd expected.
"Budgeting how you spend money before retirement can often be a misleading measurement of how you'll actually spend it during retirement," says Gorton, a veteran Certified Public Accountant and Certified Financial Planner, and head of Gorton Financial Group (www.gortonfinancialgroup.com).
"Spending 40 hours a week at work not only earns you a paycheck, it also keeps you from spending money on more vacations, matinee screenings at the movie theater, extra trips to the mall, or shopping online. You need to be exceedingly realistic in your planning, and the five years before retirement are actually the most crucial in solidifying post-employment stability...

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Don't Loosen That Grip: Resist The Urge To Relax Financial Controls »

By John Tschohl

The economy is improving, bringing with it a sense of optimism. That optimism, however, can be dangerous. All too often, it brings a tendency to breathe a sigh of relief and loosen your grip on the financial reins.
While it might be human nature to relax when things get better, it is not good business practice. The measures you put into place to control costs and reduce waste during the past few years helped you to survive; it would be foolish to discontinue them now.
While you certainly deserve to celebrate your survival of the recent economic downturn, if you want to continue that celebration into the future, it's imperative that you maintain control of your finances. Competition at every level--from price to product to service--continues to be stiff, bringing with it the necessity to keep a watchful eye on spending...

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Are You Building For Success Or Failure? »

By Steve Lefever

90 percent of SMBs fail from poor financial management

You say you want to own a business and make your own decisions? You say that owning a business is one of the few remaining ways to build net worth today? You say that building a business is one of the greatest personal challenges you can face? That success makes the clearest possible statement about your perseverance, ingenuity, and skill?
Well, ladies and gentlemen, you're right. And you're right no matter how you became an independent business owner. You probably didn't volunteer for the job. Perhaps you married into it, or inherited it, or got fired from another job and just fell into it. No matter. There it was, and you did it.
It wasn't easy, either. I know...

Feature Story:

Hidden Fees In Your 401(k)? »

Multi-Unit Franchisee

Financial advisor explains 3 fees?to look for under new rule

You wouldn't authorize a company to dive into your checking account at will to withdraw money for undisclosed "services rendered"? That would be crazy.
"But that's what many people are unwittingly doing with the retirement plans," says financial advisor Philip Rousseaux, a member of the Million Dollar Round Table association's Top of the Table forum for the world's most successful financial services professionals.
"While a new law now requires disclosure of previously hidden fees applied to 401(k) plans, it's up to you, or your financial advisor, to find and review that information and determine whether the fees are reasonable," says Rousseaux, founder and president of Everest Wealth Management, Inc...

Feature Story:

There's A New Environment Dawning: Time To Be Nimble As Markets Continue To Change »

By Carol Schleif

There's an old adage on Wall Street: When someone says, "It's different this time," run as far and as fast as you can.
After surveying today's overarching trends, however, an important tipping point seems close at hand; one that tees up an investing environment vastly different than the one we've known for decades. Survival and success will require different thought processes, strategies, and investment tactics than those we've relied on before.
When I started my investment career in the 1980s, the marginal income tax rates for top earners had fallen from 70 percent to 50 percent, and a mere 5 percent of the population owned equities. Bond yields stood in the upper teens/low 20s, and scores of wizened industry veterans declared they'd wait to invest until dividend yields exceeded bond yields...

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A Clean Transfer: Key Considerations For Succession Planning »

By Gerald Marks

A franchise is not an ordinary business asset. You don't really "own" a franchise outright as you do a traditional business. What you own is a right or license from the franchisor to operate the business under the franchisor's name for a period of time (the franchise term). More important, when retirement, disability, or death requires a sale of the franchise, you cannot change ownership unless you meet the franchisor's requirements.
This difference becomes even more complicated when it involves multi-unit franchisees, who may be area developers or subfranchisors and who may have more than one unit in two or more unaffiliated brands or sectors (think donut or burger franchisees who are also hotel and convenience store franchisees). Not only are there different franchise terms for each of the franchises, there may be different franchisor requirements in the franchise and area development agreements controlling transfer upon retirement, disability, or death of the managing member or members of the multi-unit franchisee...

Feature Story:

Know Thy Bookkeeper: 14 Red Flags For Preventing Fraud »

By Steve LeFever

I've often heard this comment by franchisees: "I keep my own books to save money, but I really hate the process!" Just as often, I've made the following response: "Business owners/managers should do what they do best; focus on making it and selling it."
If you really do hate bookkeeping (and I know I do), there's a predictable outcome: at 10 p.m. on the last day of the month, you'll still have 3 or 4 items you're not sure where to put--so you'll just "shove them in somewhere."
After a few months, your books and records will be riddled with inaccuracies. Since all of my previous articles have focused on using the powerful tools of Profit Mastery to make better, more strategic financial decisions, the lack of accurate financial information will render these financial tools useless because the data you're using is not accurate...



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