Article excerpt from Entrepreneur.com:
“You’ve thought about it long enough, and you’ve finally decided you really do want to make the franchise business opportunity leap. You’ve found the right business opportunity, and you’re convinced it’s a system you’ll succeed in. But you’ll need financial help to make it happen, and one big question still looms in your head: How hard will it be to sell a lender on the idea? Despite higher interest rates than in recent years, it’s a franchise buyer’s market out there, says Rick Anderson, general manager at Franchise Finance, a Little Rock, Arkansas, firm that originates loans and leases for the franchise industry. There are fewer buyers, so more lenders are sitting on cash. “You’ve got better terms and conditions and more finance companies [that are] anxious to talk to you,” he says. “It’s not that hard to get a loan right now.”
That said, prospective franchisees face many of the same hurdles that challenge all startups when it comes to raising the capital to open their doors. A local banker won’t necessarily see a venture as less risky simply because it’s a franchise. Loy and Melissa Ehlers, both attorneys and former Marine Corps majors, discovered that when they first set their sights on opening a Cold Stone Creamery. They went scouting for ways to raise the $300,000 they’d need, but despite the ice cream retailer’s established brand name, local lenders in their hometown of Morehead City, North Carolina, weren’t feeling warm and fuzzy. “They looked at Cold Stone as a restaurant, the riskiest venture out there,” says Loy, who at the time was working as general counsel and vice president of retail licensing for a furniture chain. With all his experience get-ting other fledgling businesses financed, he figured he’d have a leg up. Says Loy, “The local guys said, ‘We love you, but we can’t do it. It doesn’t matter if you have a 200-page business plan with all the charts and bells and whistles—you’ve never operated a restaurant.’”
Fortunately for Loy and Melissa, 39 and 41, respectively, Cold Stone had a preferred lender program with Comerica that made the borrowing process a lot easier for newcomers. Comerica was familiar with the Cold Stone system and felt comfortable that its relatively small number of store closings meant the franchisor did a thorough job screening its franchisees. The Ehlerses took out an SBA-backed loan for the first store, then bought four more stores, one of which they’ve already flipped. Without a track record to point to, the Ehlerses would likely have had to stop at one store, but with the Cold Stone connection, they were able to open four locations in nine months. “I don’t care to do that again,” Loy jokes……Read More Here.
“In his State of the Union address, President George W. Bush pledged to help put affordable health care within reach of all Americans. Rising health care costs have hammered small businesses for years, so any help on this front is big news for entrepreneurs. Of the nearly 47 million people uninsured in the U.S., 63% work for small businesses, according to a report by the Employee Benefits Research Institute, a nonprofit research firm.