TMCnet:

Vinod Kapoor believes in healthy food. If times were different, he might consider adding another Saladworks franchise unit to the three he already owns.

But with food prices high and some sources of credit freezing up, many of the restaurant franchisees he knows are trying to sell units instead, Kapoor said. The problem is finding buyers.

“I’m not even thinking of expanding,” Kapoor said, sitting in his restaurant along Route 23 in Wayne. “I’m just trying to keep my units operational without getting ulcers.”

Reduced access to capital has some franchisers struggling to maintain their growth and many franchisees wondering how to pay for improvements. Prospective franchisees, meanwhile, face having to raise hundreds of thousands of dollars for start-up costs at a time when banks are reluctant to lend.
Tom Scarda, a Long Island-based consultant with FranChoice, helps prospective franchisees find a good match and secure financing. He said traffic to the group’s Web site is down 40 percent over the last year.

“I do work with some people who have their own capital, but for the most part we’re at a standstill,” said Scarda, himself a former franchisee.
Clients who do come knocking show far more flexibility than usual with where they end up, he said.

“They say, ‘I just want to get into a system with a low initial investment and where I’m more sure to get customers,'” he said.

A spokesperson for the International Franchise Association in Washington, D.C., said the group has heard anecdotally that the credit crunch is “significantly slowing down some expansions.”

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