An article by Matthew J. Kreutzer of Armstrong Teasdale found recently in the National Law Review focused on Recent Franchising Stories:
At the beginning of 2012, the big story in franchising appears to be the same one that we have seen for the last several years: money. Franchisors are still looking for answers to questions about growth in a time when it is difficult for prospective franchisees to find funding. Are banks willing to lend money for small business? What kind of qualifications does a prospect need to have to get a bank loan? Are there good alternative sources for funding? How can we attract new franchisees and support existing ones in a slumping economy?
There are a couple of good articles this week that demonstrate possible answers to these questions. Yesterday’s Wall Street Journal had an article relating to some of the creative incentives being given by franchisors to assist their franchisees in a continued down economy. Papa John’s and Denny’s are establishing programs to lend money to their franchise owners, cut back on royalty fees, and assist owners in challenged or growth markets. These are good examples of the types of programs that a franchisor can implement to help franchisees during challenging economic times. An article on restaurant-focused site MonkeyDish highlights the ways that small business owners can find funding in challenging capital markets. This includes finding lending sources through relative newcomer Boefly.com (often called the “match.com” for small businesses), which has over 1500 participating lenders, and using middlemen such as Franchise American Finance and American Association of Government Finance, which can assist small business owners in wading through the red tape associated with Small Business Administration loans.
Most prognosticators predict that in 2012, we will start to see economic growth. One thing is certain: if more small business loans are made, the economy will get better.
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