Franchise Finances: Growing Bank Loans

I had the opportunity to participate in a panel entitled, "Engaging in Franchise Lending: Growing Bank Loans in 2012 Using a Proven Concept," at CBA LIVE, the annual Consumer Bankers Association (CBA) conference. Joined by International Franchise Association (IFA) President and CEO Steve Caldeira and FRANdata President and CEO Darrell Johnson, I was honored to be given such a great opportunity to show small business lenders why BrightStar and franchising, in general, are great customers for banks. The CBA views franchise lending as an opportunity for increased business. As part of the panel, we discussed the partnership between the IFA and the CBA to further educate CBA member banks on the benefits franchise brands bring to the table. As a franchisor myself, I was able to bring a unique perspective to the table by detailing how BrightStar has built its strong standing with lenders and secured breakthrough access to capital for our owners by teaching them how to present to banks. That preparation, plus the support mechanisms we have in place to enhance franchisee performance and maximize the likelihood that banks are repaid, builds trust with lenders. Specifically, I highlighted two BrightStar initiatives that led to a verbal commitment from a major national bank to make accounts receivable financing available to BrightStar franchisees: providing full A/R reporting and monitoring, and moving the whole BrightStar system to utilize Microsoft Dynamics Great Plains’ financial system. We already had financing in place for new franchisees going into this, but will have exciting announcements in the next 60 days regarding easier access to financing for existing franchisees opening additional territories that they secured through an area development agreement. BrightStar owners looking to expand will be able to apply their franchise fee for additional territories toward the cash infusion required for this additional financing so long as they have positive cash flows from their first location. In addition, the verbal agreement to make accounts receivable financing available at much lower interest rates than factoring and in a way where customers remit payment directly to the franchisee will allow franchisees to accelerate growth. Many franchisees have held back their growth based upon a lack of access to capital and with increase accounts receivable financing and sales opportunities afforded through Joint Commission, 2012 will be an exceptional year for the BrightStar system.