The financial landscape has changed dramatically since the credit crisis of 2008-2009. Over the past few years, banks have been lending again, some very aggressively. As a result, many franchisors feel more confident letting their candidates secure funding on their own. While this can be less demanding for the franchisor in the near term, it may be shortsighted when looking at the long term effect.
The old saying "if you let the candidate drive the bus, he will crash it" comes to mind. The reason many individuals decide that franchising is the way they want to become entrepreneurs is because they were looking for a turnkey business with a proven system. As a franchisor you have vetted suppliers for equipment, architects for construction, suppliers for food, payment processors, etc., why wouldn't you identify a resource to simplify the financing for your concept?
IF YOU DON'T HAVE A FUNDING PARTNER, NOW IS THE TIME
The ability of your franchisees to secure funding (in good lending times and bad) directly impacts your franchise brand's growth and long-term success. So if you don't have a funding partner already, now is the time to consider it.
But it's not enough to work with one bank or just any funding partner and expect your sales to skyrocket. You have to partner with one you can trust to simplify funding for candidates, offer a variety of funding options that can be customized to their individual needs, and provide tools and resources to help expedite the process.
Here are few things to look for:
* Candidate Pre-qualification (Free is Better)
Pre-qualifying your candidates in the early stages of franchisee recruitment is an important step in identifying if he is a good fit for your concept. But beware, not all prequalification programs are equal. Some are free, some are not. Some tell you the amount of financing a candidate qualifies for, some don't. Some utilize a live funding expert to speak directly with your candidates and can provide more than just a "yes or no" answer, others rely on automated forms. All are different, so it's up to you to determine which one is a better fit for you and your candidates.
* Resources to Showcase...