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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.

Cathy Amato expects to do $30 million in combined sales for 2012. That's a far cry from the less than $250,000 her company did when she first started two decades ago.
  • Multi-Unit Franchisee
  • 2,214    20
In my previous column I made several suggestions for successfully navigating our times to a brighter future.
  • By Carol M. Schleif
  • 2,178    34
One of the largest uphill battles a franchise owner faces is combating the costs associated with hiring, training, and retaining good people, particularly in businesses with a high turnover rate.
  • By Jason Hamilton
  • 23,216    10,209
Everyone knows the value of a sponge: it absorbs water. This is a pretty good deal.
  • By Steve LeFever
  • 3,956    560
Turns out low-investment franchise brands carry a lot of weight. Although they may cost less than some of the big names in franchising, they have a significant presence in the market, according to a new report from Franchise Business Review.
  • Multi-Unit Franchisee
  • 4,107    32
A couple of years ago, I went through an exceedingly challenging period in my personal life, where the path I'd been on for several decades proved flawed, and I had to figure out how to pick up the pieces and move on. The status quo had become unacceptable, even though the way forward was unclear.
  • By Carol Schleif
  • 2,706    67
Johnny Collins is a man of faith and endurance. He knows what kind of hard work and dedication it takes to run a marathon, serve as a firefighter, and work as a security officer.
  • Multi-Unit Franchisee
  • 2,688    160
Today's economy has resulted in some brutal price wars that make it difficult, if not impossible, for many companies to raise prices.
  • By Steve LeFever
  • 18,265    5,423
Sunita Sagar got her first shot at franchising in 2007, when she was given the chance to buy an underperforming Denny's in Campbell, Calif.
  • Multi-Unit Franchisee
  • 3,003    339
Robert Branca, Jr., is part of the Dunkin' Donuts family...seriously. Branca and his family own 60 Dunkin' Donuts in New England.
  • Multi-Unit Franchisee
  • 3,076    53
Is anybody else as fed up as I am with hearing about how bad things are? Let's get on with it already and start focusing on what we can do to survive--and thrive--in the new reality.
  • By Carol Schleif
  • 3,239    62
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Chirag Patel left India to work as an engineer and consultant in America. But it didn't take long to learn that franchising offered big opportunities for anyone with an entrepreneurial spirit.
  • Multi-Unit Franchisee
  • 4,592    508
In 1996, Michael Ansley and his former college roommate asked their fathers for loans to buy their own franchise (Buffalo Wild Wings, then known as BW3) unit near Ann Arbor, Mich.
  • Multi-Unit Franchisee
  • 2,747    193
In business, owners often become trapped because they don't heed the messages their business sends and don't pay attention to basic principles.
  • By Steve LeFever
  • 3,605    0
Thinking of buying a new franchise? Here are 5 questions to ask the prospective franchisor in order to determine if they will support you with financing.
  • By Mike Rozman
  • 8,078    346
Franchisees, business, and property owners who have personally guaranteed commercial loans face a challenging situation when banks seek repayment, especially in today's state of economic distress.
  • By Steve Huntley
  • 3,231    285
It happens every year, usually in February or March. Business owners across the country meet with their accountants to review the previous year.
  • By Steve LeFever
  • 4,154    163
There's no arguing that banks, potential investors, and creditors look heavily to a company's financial statements to determine its value.
  • By Mike Handelsman
  • 3,899    0
Smart franchisees are always looking for ways to increase cash flow and reduce expenses.
  • By Andy Gustafson
  • 6,171    189
As we've seen in high-definition in the past few months--from the natural and man-made disasters in Japan, to the rolling upheavals across North Africa and the Middle East, to the volatile whipsaws in food and energy prices--the factors that must be accounted for while structuring financial affairs are much more complicated than ever before.
  • By Carol Clark
  • 3,957    23
Growth: the all-American measure of success. But what kind of growth? And how do you measure growth in relation to success?
  • By Steve LeFever
  • 5,722    575
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The inspiration for Randy Elias's expansion into a new franchise concept came from a restaurant he'd been frequenting for years.
  • By Tracy Staton
  • 4,156    84
Access to capital has been a bane to franchise growth for nearly three years. Much of the blame has been placed on lenders, who have been notoriously gun-shy since the September 2008 financial debacle.
  • By Eddy Goldberg
  • 3,329    57
A financial legacy can provide an incomparable "leg up" to offspring--if they are adequately prepared. However, inelegant handling of the training stage can create generations of enmity, or breed unmotivated individuals with an entitlement attitude. A family business (especially if some offspring participate in day-to-day operations while others do not) presents even more complexity, particularly in the area of "fairness." Following are a few things to think about as you grapple with starting the preparation process.
  • By Carol Clark
  • 2,567    45
You might not know it from reading the news, but there's a lot of money out there looking for a good home, and high-performing multi-unit franchise companies have become targets for private equity investors. Estimates of available private equity peg the pent-up funds at about $500 billion, more than enough pie for most multi-unit franchisees to get a slice--if they have what it take to appeal to investors.
  • By Eddy Goldberg
  • 5,434    634
Back in 1981, with the prime borrowing rate at an all-time high of 21 percent, most bank customers felt that those cameras they have in banks to photograph robbers should, in all fairness, be pointed at the "real" crooks: the lending officers. At such rates most companies found it difficult (if not impossible) to borrow money. Actually, it wasn't so hard to borrow money--it's just that no one could repay it.
  • By Steve LeFever
  • 4,116    185
Our next financial concept? OPM (other people's money). As a former commercial banker, I've had the opportunity to see both sides of the "debt/leverage" issue. When you go to a bank for a business loan, your banker (whether they tell you or not) will quickly compute your debt-to-equity ratio. As bankers, we viewed debt as an equivalent of risk: the higher your ratio, the more debt you have in proportion to equity. Therefore, the higher your financial risk. Let me explain why this is so. It all goes back to the financial basics: Assets = Liabilities + Net Worth.
  • By Steve LeFever
  • 4,654    146
On many occasions during the past year, I've seen and heard the past 10 years dubbed as "The Lost Decade." From a stock market perspective--with prices essentially flat between 2000 and 2010--it's not hard to understand why. Upon writing this article, the annualized return on the S&P 500 over the past 10 years was -0.68 percent, versus the average return of 6.28 percent since 1929 (according to FactSet Data Systems). Interestingly, over a similar time frame, aggregate corporate profits have doubled while total household net worth is about 50 percent higher.
  • By Carol Clark
  • 3,139    14
Refugees from corporate America seeking capital to open a franchise business are tapping into their retirement plans to fund their fledgling businesses. So are multi-unit franchisees seeking to expand.
  • By Eddy Goldberg
  • 5,394    0
Seat-of-the-pants management styles may be fine themes for business magazine articles and their Hollywood adaptations, but responding to the symptoms of problems instead of preventing problems in the first place is like taking aspirin to cure pneumonia.
  • By Steve LeFever
  • 10,232    498
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