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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:

Quarterly Checkup: Your Q1 Results Set The Trend For The Year »

By Rod Bristol

If your business is on a calendar year, you've finished your first-quarter operations. Hopefully, your accountant or bookkeeper gave you your financial reports by April 15--both an income statement and a balance sheet--and you spent time reviewing them.
So, how did you do???
If you set up your financial information for maximum "management intelligence," you now have a very accurate picture of how your business is performing. Your financial statement should have given you your 2016 first-quarter results compared with your 2015 first-quarter results, and also compared your results with your annual plan for the first quarter of 2016.

Let's talk trends

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Why Financing And Site Selection Matter »

By John T. Hewitt

Multi-unit ownership is a franchising trend that's likely to keep growing. It picked up during the recession, when capital was hard to come by and franchisors saw how their single-unit owners struggled. Now, multi-unit operators own more than half of the franchise units in the U.S., and the upward trajectory is expected to continue. Single-unit ownership has its benefits, but multi-unit owners tend to have more experience, more business relationships, and the ability to move quickly when expansion opportunities present themselves.
So when considering a franchise opportunity, it makes good business sense to consider a multi-unit plan from the start. And in considering a multi-unit strategy, take a careful look at financing and site selection...

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True Business Success Requires Liquidity »

By Champ Rawls

Everyone feels the liquidity pinch some time or another. Growth, acquisitions, internal investments, taxes, and bonuses take capital and drain liquidity. Business liquidity is the measure of the extent to which the organization has cash or assets to meet the short-term obligations. When you are looking to grow or need cash for improvements, short-term obligations are not that important.
However, as a multi-unit franchisee business owner, you know the internal struggle associated with wanting to grow or improve, while being cognizant of cash flow and capital requirements on a day-to-day basis. Success is defined differently depending on the reasons you started your franchisee business. For some it is about the "lifestyle" and wanting the flexibility to do what you want when you want, and for others it is the monetary and material gains that are more important...

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Growing Gross Margin: Small Steps Taken Over Time Boost Profits »

By Rod Bristol

Do you know the seven drivers of gross margin? More important, do you know how to actually manage them in your business? Let’s look at each one in turn—and they are remarkably similar in virtually any kind of operation.

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Managing Uncertainty: Trends To Watch In 2016 »

By Carol Schleif

After an extended period of complacency, markets have whipsawed in 2016. Will this level of heightened volatility continue? Does it signal an impending recession? We think the answers may well be "probably" and "we think not." Let's look at what could go right, what to watch, and what might be different in 2016.

What could go right?

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More For You!: Create Additional Profit In 2016 »

By Rod Bristol

By now you've completed all of your financial budgeting and planning for 2016, have it set up on a month-by-month basis, and have organized your financial reporting to be able to measure your progress both on actuals to date and performance to plan. Right? Riiiiiight!!
Perhaps you're not at that point in the financial management of your company. But what is the minimal acceptable standard for financial reporting in a business today? It's an income statement and a balance sheet delivered to you, the business owner, by the 15th day following the close of business of the previous month, every month, period! There is no other minimal acceptable standard.
If you're attempting to manage your business with quarterly, half yearly, or (Good grief!) annual financial statements, you are missing a tremendous opportunity to drive up the financial performance of your business...

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Maintain Equanimity: Learning To Prosper From Market Volatility »

By Carol M. Schleif

As we saw in graphic detail this past August-October, interim market swings in both directions can be violent. Major markets around the globe experienced their first correction in more than half a decade, only to make it all back up and then some within a couple of weeks. Assets hit the hardest on the way down (e.g., emerging market equities and tech stocks) were among the largest gainers on the way back up. Such whipsaws once were commonplace, though markets in recent years had not seen that level of volatility and had become frustratingly complacent. For those with a sound plan in place, interim market volatility can represent potential versus overt risk, as it allows the nimble to initiate or add to high-quality assets that become unduly stressed amid near-term panic...

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Economic Census Data Highlights Franchising's Role »

Multi-Unit Franchisee

Newly released data from the U.S. Census Bureau's 2012 Economic Census reveals the significant impact franchise businesses have on the U.S. economy, illuminating for the first time since the 2007 census the number of establishments, jobs, and payroll in franchised businesses. The agency's report is based on a survey of U.S. businesses with paid employees as part of the Economic Census, which is updated every five years.
The Census Bureau reports franchise businesses accounted for 560,086 establishments and 10.8 million jobs in 2012. These businesses paid $193.3 billion in wages and salaries and benefits and had total sales of $1.5 trillion.
"Franchising plays a vital role in our nation's economy. The understanding we gain from these statistics about the impact franchise businesses have on the economy is important to further educate the public and lawmakers about the importance of the franchise business model, and the contributions to economic growth and jobs in thousands of communities across the U...

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Seeking Stability: How Long Can This "Surreal State" Go On? »

By Carol M. Schleif

Most markets around the globe have performed well following the lows reached during the financial crisis. Investors have anchored to a new status quo, one marked by low interest rates, moderate growth trends, and reasonable returns in most asset classes. This "new normal" has teed up a general aura of investor complacency not seen for years, potentially setting the stage for emotionally driven behavior among the unprepared.
All things considered, markets have proven amazingly resilient to potential concerns for many quarters now, shrugging off a halving of oil prices and the upswing in the relative level of the U.S. dollar. It seems a parallel universe to the bleak days of 2009-2011, when fears of a eurozone breakup and the proximity to the still-recent market downturn had investors nervous and markets depressed...

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Are You Seasonally Adjusted?: Keeping On Top Of Annual Cash Flow Fluctuations »

By Steve LeFever and Rod Bristol

As we enter summer each year, businesses with a seasonal sales cycle can change significantly. If you are lucky, this is your busy season with expanded revenue and, hopefully, expanded profits and cash flow. If you run a business that has diminished summer sales, you are in for the belt-tightening process of reduced revenues and cash flow.
Either way, it's critically important to understand patterns of cash flow--and how to best prepare for the seasonality of sales that most businesses experience during the course of a year. Our goal as owners is to determine the pattern of cash flow in our businesses and plan for adequate cash to cover expenses and repay debt. It is also important to clearly understand the difference between "seasonal" cash requirements and your long-term growth capital needs...

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What's It Worth?: Business Valuation - Tips For A Faster Sale »

By Rod Bristol

There are many misconceptions about how to go about valuing your business. In general, most business owners have a value in their mind that is usually several times more than the actual value a sophisticated, competent buyer ultimately pays. The process of getting from perceived value to sale price can be very, very challenging. Here is some helpful information to get you to a successful valuation and faster sale of your business.

Business valuation

Feature Story:

What's It Worth?: Business Valuation - Tips For A Faster Sale »

By Rod Bristol

There are many misconceptions about how to go about valuing your business. In general, most business owners have a value in their mind that is usually several times more than the actual value a sophisticated, competent buyer ultimately pays. The process of getting from perceived value to sale price can be very, very challenging. Here is some helpful information to get you to a successful valuation and faster sale of your business.

Business valuation

Feature Story:

Failed Units: Not Just A Franchisee Issue »

By Darrell Johnson

Throughout my career I have observed that a strong alignment of interests between two business parties usually leads to good outcomes for both. All franchisors with any marketing savvy will say they are strongly aligned with their franchisees. What is the evidence that a brand walks the talk?
There are many ways a franchisor can help its franchisees, starting with a full and high-quality support program, and including a disciplined prospect screening program, training that measures results, site selection and opening assistance based on proven criteria, and field operations and compliance that are effective.
Then there's transparency. Brands that have a meaningful Item 19, that have system dashboards that compare unit performance in real time, that support capital access through SBA eligibility and Bank Credit Reports (BCRs), and that seek system feedback through independent third parties are further examples...

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Boosting Unit Profitability »

By Steve LeFever and Rod Bristol

We're often asked, "I've been in this system four years. When should I start making a profit?" This is a disturbing question at best--as if profits were somehow time-sensitive: just wait long enough and, Presto!, profits. If only it were that easy. Here are some thoughts on improving your bottom line.

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Don't "Grow Broke": Overcoming The Dangers Of Poorly Managed Growth  »

By Rod Bristol


Good news! The economy is growing again. However, expanding businesses are often in greater peril than those that have suffered through a challenging economy and declining revenues. The often misunderstood truth is that it costs money to grow.
Business owners who don't understand this end up fulfilling their higher sales dreams, but often at the cost of bankrupting their company. How can you prevent this? A great place to start is understanding the concept of "Financial Gap," the difference between the money you have and the money you need to grow.

Why does growth cost money?
As your sales grow, your company needs new assets to support those increased sales. By using the Financial Gap tool and calculating the present efficiency of your operation, you can predict with great accuracy what you will need in new assets to support increased sales...

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Capital Infusion Will Help Brightway Insurance Grow »

Multi-Unit Franchisee

Brightway Insurance has a new deal for $20 million in bank financing through SunTrust Bank in a strategic move to help fund its national expansion. Brightway is a national property/casualty insurance agency selling through a network of franchised locations. The company was started in 2008 and has grown to 117 locations in 10 states.
"We are thrilled to have entered into this relationship with SunTrust," says Brightway founder and chairman, David Miller. "Owning your own business is the American dream, and we want to bring that opportunity to people everywhere. In turn, Brightway agents will bring expert counsel and more choice in insurance companies to consumers everywhere, ensuring they have the coverage they need at prices they want...

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Fund-Amental Change?: Is Aziz Hashim's New Fund For Franchisees A Game-Changer? »

By Eddy Goldberg

Tired of paying royalties? How would you like to get in on collecting them? That's one of the reasons--among many--behind an innovative fund created to allow multi-unit franchisees to own or invest in franchise brands.
"If you're in franchising as a multi-unit franchisee and have built your enterprise by paying royalties, it's a very natural hedge to have an investment in an entity that's in the business of collecting royalties," says Aziz Hashim, founder and general partner of the new fund, called NRD Partners.
Hashim, who has made a career operating restaurant franchises, says he has been preparing for this new role all his franchising life. "I've entered and exited 14 brands in my career. So in a way I've been practicing as a little mini-private equity or fund anyway...

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Executives Caution New York About Discriminatory Wage Increase »

Multi-Unit Franchisee

Three pro-business group representatives have spoken out about New York Governor Andrew Cuomo's push to raise minimum wage in the state. The governor has said that he will ask the state labor commissioner to convene a panel to decide whether fast-food workers' wages should be raised.
But Melissa Fleischut, president and chief executive of the New York State Restaurant Association, and Ken Pokalsky, vice president of the Business Council of New York State, told The New York Times the move was ill advised.
"Singling out a sector of one industry to have a higher minimum wage than all other occupations is unfair and arbitrary. The minimum wage is rightfully set by the Legislature and should affect all businesses equally," said Fleischut...

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Russo's Restaurants To Offer Credit Access To Franchisees »

Multi-Unit Franchisee

Guidant Financial, BoeFly, and Russo's Restaurants have teamed up to provide more credit access for entrepreneurs interested in operating Russo's Restaurants franchises.
The new partnership between small business financing company Guidant Financial, BoeFly.com, the online marketplace for small business loans, and Russo's, the 42-location franchisor of the fast casual and casual dining brands Russo's New York Pizzeria and Russo's Coal-Fired Italian Kitchen, is part of Guidant's Funding Assurance program to help franchisors expand their brands. The partnership will offer existing and prospective Russo's franchisees exclusive access to financing services from Guidant Financial and BoeFly, starting with a customized prequalification tool on Russo's website called bQual...

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3 Tips For Inheritance Planning »

Multi-Unit Franchisee

The odds are good that you will inherit money or assets in the coming years. And, if you're like most people, you'll save only half.
The largest transfer of wealth in history is underway, with beneficiaries expected to receive $59 trillion over the next four decades, according to a Boston College study. But those heirs will lose, spend, or donate half of their inheritances, if a 2012 study by Ohio University holds true.
"People need to plan for inheriting wealth to avoid the pitfalls that result in so many heirs making emotional or ill-informed decisions they later regret," says Michael Abbott, a veteran financial consultant and CFO of The Abbott Bennett Group, (www.theabbottbennettgroup.com).
It's never wise to make important financial decisions based on emotion, and inheritance often starts with grief -- one of the most profound emotions we ever experience, says Chris Bennett, co-founding partner of the firm...


Learn More

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Multi-Unit Franchisee Magazine

Issue III, 2016

Multi-Unit Buyers Guide    

2016 Multi-Unit Buyers Guide

Special Edition

Top Opportunities »

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