Franchisees would not have to scrounge for capital if franchisors provided lenders with detailed information about the brands’ performance and plans, according to findings presented at a recent event focusing on franchising’s credit crunch. The revelation seemed to stun some on the 200-plus attendees, who were drawn from the “C” suites of all franchised businesses, including convenience store chains. Research presented at the Small Business Lending Summit confirmed what many franchisees have been complaining about for years: They can’t get the financing needed to expand or refurbish.
The researcher, Frandata, said franchisees across all industries would fall about 20% short of their capital targets for 2011, a gap of some $2 billion. The ripple effect will impede the recovery of both franchising and the economy in general, said Frandata CEO Darrell Johnson. More.