What to consider when lending to a franchisee

Description

Abstract: Some franchisors offer financing, but first-time franchisees often find themselves in need of traditional bank loans. And it’s not just new franchisees that need access to capital. Established ones frequently need funds to purchase new equipment, remodel their locations and meet short-term cash crunches. This article explains how to evaluate these types of loan applications. A sidebar discusses the importance of establishing a relationship with the franchisor to increase the bank’s exposure to franchise-related lending.