There’s been a lot of negative news these past few weeks related to business lending. You’ve probably heard there’s a credit freeze and you may think that means nobody’s lending. But Don Johnson, owner of Diamond Financial Services, New Jersey, says that’s a misconception. “Our company works with over 25 lenders so we really know what’s going on with the state of SBA and franchise lending. We’re prequalifying a little more carefully, but our success rate is still high. In the media it’s all doom and gloom, but loans are getting approved. You just have to know how to do it. Most people don’t know how to do projections or put together a loan package. Over 80% of loans get declined due to packages that aren’t complete or correct. And the rest is simply not going to the right type of lender. The money is out there, you just have to know where to go.”

Still, things are different these days, which Johnson points out:

1. Lenders are putting more emphasis on experience and some people may have to make a higher down payment. Down payments across the board on startup franchise loans could be more than 25-30%.

2. Loans for newer franchise concepts need stronger borrowers.

3. Lenders are being more cautious about quick expansion or concepts that have a high default rate on their SBA loans.

4. More lenders are either changing their criteria or limiting their business to specific loan sizes, certain industries, or certain states. For example, a minimum loan that used to be $100,000 might now be $250,000.

5. Lenders are taking longer to give loan approvals. Instead of 2 weeks, it can now be 2-3 weeks or maybe a month.

Johnson says things are especially good for franchise systems with a strong track record and 100+ units. “Some lenders are offering favorable terms such as 15-20% down with no collateral for certain franchise systems,” Johnson says.

For everyone else, Johnson says there are some changes pending with SBA, which should prove helpful. “The government is trying to give more incentives to lenders to start lending money through the SBA such as smaller fees and increasing the guarantee (potentially) up to 90%. And they’re trying to get the loan size increased under the SBA 7(a) loans from $2 million to $3 million. At the same time, the bailout package is trying to get more money to banks and get rid of some of their debt on the books. All in all, the lenders should be in a better position to lend and be more aggressive.”

Contact info:
Diamond Financial Services
www.FranchiseFunding.net
(877)508-2274

Recession-resistant Franchises

It seems every day we hear of more financial institutions that are taking a beating. So you might be surprised to learn there are financial services franchises that are actually benefiting from the economic fallout. One such company is Interface Financial Group (IFG), a firm that has been providing short term working capital for businesses for over 35 years. How do they do that in the midst of a credit crunch? “We are what is known as an invoice discounter,” says IFG President, David Banfield. “Our franchisees buy specific invoices from small businesses through very simple transactions.”

Banfield explains, “Say our client company has made some tables, sold them to Staples, and Staples will pay the invoice in about 40 days. The table manufacturer says ‘if I could get that money today, I could buy some more lumber and hardware, sell some more tables, and grow my business’. We say, you can get the money today. Bring us the invoice and we’ll buy it from you at a very small discount. You will have immediate cash to go and do whatever you’ve got to do to grow your company. Tell Staples that you’ve sold the invoice to IFG and then at the end of the credit period, Staples will send us a check for 100% of the transaction. That’s it.”

Although this sounds a lot like factoring, it’s not. “Factoring tends to be more of a bundle of services,” says Banfield. “Factors usually take all of a company’s accounts receivable and use them as collateral to lend money, 60-85% of the total value, and treat it as a revolving loan. The factor also takes on all of the accounts receivable administration work - credit checking, sending out statements, doing cash reconciliation, and so on. There is a contract that says the client will use the service for a period of time, so they’re locked in. Invoice discounting is a ‘use it as you need it’ service. If the client has a little bit of a cash flow problem this week and can’t meet payroll, they sell us a couple of invoices for cash and that solves the problem.”

An IFG franchisee’s job is to identify companies that could use the service, show them how it works, get them on board as a client, and then service their needs. It’s a business built primarily through relationships and referrals. “We do not as a franchise organization go out knocking on doors looking for business and we’re not big on advertising,” says Banfield. “We get the majority of our business referred to us by contacts that we develop in banks. In this particular economy, where banks are moving away from the small business lending arena, more business is being pushed toward our franchisees. For us, these are great times!”

IFG is always interested in inquiries from potential franchisees who are mature business people. The particular background doesn’t matter. “The key is that they’ve got their business background and they know how the world works,” says Banfield. “They are good communicators and decision makers, and they understand the small business cash flow need.” Because of the nature of the franchise, there are no territories. “Every area is always open. We are operational in the U.S., Canada, Australia, and New Zealand.”

Contact info:
Interface Financial Group
800-387-0860
http://www.interfacefinancial.com/

Attention Franchise Buyers: Circle Nov. 7-9

By: Joel Goldstein

Sure we all know that the economy is a little chaotic now. But, that hasn't stopped thousands of people from the quest of finding the ideal franchise business.

May I suggest that one of the very best ways to help you reach your goal is to attend the West Coast Franchise Expo in Los Angelos Convention Center on Nov. 7-9.

Make a Plan & Set Goals

Hundreds of companies will be at the Los Angeles Convention Center for the Franchise Expo. The first thing you'll notice when you walk onto the expo floor is the variety of opportunities available. You'll need to invest sufficient time researching your options. What type of business appeals to you? What skills do you have? What type of lifestyle do you want? What is your budget? These are the important questions to consider as you review the extensive range of choices available.

You enjoyed that delicious sandwich at a franchise location recently and now you're thinking, "I could own one of the restaurants". Food franchises are great for a lot of people but typically employ many workers, require a large upfront investment, and characteristically extended hours. Different franchises feature different requirements-some more flexible then others. Most people don't realize the array of franchises offered until the serious research starts. Look for a franchise that can integrate your skills and goals.

Doing Your Research

Besides getting to talk to representatives of a wide array of franchise opportunities, you will also have a number of free seminars which you may attend. Some of these are: The 7 Secrets you must Know before Buying a Franchise and the 3 Traps that will Kill You; Is a Master Franchise/Area Franchise Right for You?; and How to Finance your Franchise. In all there are over 30 free seminars and in-depth synopsis on a range of topics. You will also meet with franchise attorneys, government agencies like the US SBA and experienced consultants. All of this will provide you with the information you need to make an informed decision.

How To Register for WCFE

With over 2500 franchises in 75+ industries, there's a franchise out there just waiting for you. Register free today, for the Nov. 7-9 West Coast Franchise Expo compliments of FranchiseHelp!

It’s time to get into business for yourself with a proven concept. Click here for free expo and seminar admission compliments of FranchiseHelp

Restaurants Plan to Change Menus and Hike Prices in 2009

Restaurants, now working to secure supply and price contracts for meat and other commodities for the upcoming year, are expecting big increases in food costs - increases that will likely lead to menu changes and price hikes. Some chains are already adjusting their menus to reflect current high costs for both beef and chicken. CKE Restaurants Inc., which operates the Hardee's and Carl's Jr. chains, stopped offering Double Cheeseburgers in its 2 for $3 promotion at the end of August and replaced them with Jumbo Chili Dogs and Hot Ham 'N' Cheese Sandwiches to avoid selling pricey beef at a lower price.
Even fast-food leader McDonald's Corp. is considering making some changes to its popular dollar menu - either by changing the items on the menu or bumping up prices.

Wholesale food prices have jumped 8.7 percent year-to-date through August. That's on top of a 7.6 percent increase in 2007. Menu prices, meanwhile, have gone up just 4.2 percent year-to-date through August - a hefty hike for thrifty consumers but not enough of a boost to completely offset higher food and ingredient costs. (Nation’s Restaurant News, 10/14/08)

Pizza Hut Debuts Facebook Ordering

Pizza Hut is unveiling a new application for Facebook Platform, making it the only national pizza chain to offer the ability to order delivery food without ever leaving the popular Web site. The new application, named "Pizza Hut Interface," integrates with Facebook's main commerce system. The application allows registered pizzahut.com users to browse the full Pizza Hut menu without leaving Facebook, and remembers your favorites for quick re-orders. In conjunction with the debut of Pizza Hut Interface, Pizza Hut will unveil a redesigned page on Facebook, where Facebook users can download the application and add Pizza Hut to their collection of favorites. This allows Pizza Hut fans to stay abreast of the latest news, promotions and deals from Pizza Hut, while posting their favorite Pizza Hut-related stories, photos and videos. (QSR Magazine, 1015/08)

Hilton to Quadruple Caribbean and Latin American Portfolio

Hilton Hotels Corporation today announced expansion plans to quadruple its presence in the Caribbean and Latin America by adding 150 new hotels to the portfolio over the next five years. The company also revealed a new development structure, made up of six dedicated staff, to lead the efforts in achieving this objective. This news underscores the company’s stated goal to add 1,000 hotels to its international portfolio in ten years.

After receiving an undisclosed capital infusion from Woodbridge Holdings Corp., an investment and holding company, Pizza Fusion, the eight-unit, fast-casual pizza chain, has hired the investment firm’s managing director as its chief executive officer. Mark Begelman, a former Office Depot president and chief operating officer, was tapped this month to replace CEO Pizza Fusion’s co-founder Vaughan Lazar.
Fort Lauderdale-based Pizza Fusion, which is a majority-franchised chain, is pursuing an aggressive growth plan targeting 500 franchises during the next five years. Company officials said it has more than 75 franchises currently in development in 15 states, with 18 locations currently under construction and expected to open during the next three months. Pizza Fusion offers a 75-percent organic menu and delivery service in hybrid cars. It also builds restaurants certified by the Leadership in Energy and Environmental Design, or LEED, green building rating system. (Nation’s Restaurant News, 10/14/08)

Fatburger to Open in Indonesia

Fatburger parent Fog Cutter Capital Group Inc. has signed a multiunit franchise development agreement to open its first restaurants in Indonesia. Franchisee PT.Global Food Indonesia is looking for potential Fatburger locations in Jakarta, the country’s capital and largest city, as well as in the secondary markets of Surabaya and Bali. Based in Santa Monica, Calif., the Fatburger chain includes 92 franchised or company-owned restaurants in 14 U.S. states, as well as Canada and Macau. Franchisees are scheduled to open locations in Dubai, Saudi Arabia and Hong Kong before the end of the year, and additional locations are planned for Kuwait. (Nation’s Restaurant News, 10/21/08)

Fitness Together to Expand in UK and Ireland

The Fitness Together Franchise Corporation (FTFC) has announced an agreement to open additional franchise locations in the United Kingdom and Ireland. The company opened its first location in Dublin in 2006, and the success of the concept has led to early demand for expansion. Fitness Together has shown impressive growth in the last 10 years, catering to a client wanting to work one-on-one with a trainer in a smaller studio. Offering fully-equipped private training rooms, personal attention, fitness assessments, customized workouts and nutritional programming, Fitness Together follows a 1 client, 1 trainer, 1 goal focus and motivates clients to stick to their fitness objectives. There are currently over 500 Fitness Together franchises throughout the United States as well as sites in Canada, Costa Rica, and Israel. (The Irish Franchise Magazine, 9/24/08)