The International Franchise Association brought together bankers, politicians, government officials and franchise leaders for a Small Business Lending Summit April 7 in Washington, D.C., in an effort to work toward solutions to the obstacles that franchisees and other small-business owners are encountering in getting the loans they need to start up and grow. As part of the summit, high-achieving franchisors and franchisees talked about what they love about franchising and how the business model helps turn people into successful entrepreneurs.
“I get jazzed by the franchising concept where people put their own money at risk,” said Nigel Travis, a franchising veteran and president and CEO Dunkin’ Brands, the parent company of Dunkin’ Donuts and Baskin-Robbins.
BrightStar Franchising CEO and Co-Founder Shelly Sun said she decided to franchise her home health care business to help more people and to enable other families like hers become business owners. Sun added that she’s passionate about helping her franchisees to make money while doing something they love.It’s that commitment to helping franchisees succeed that makes franchising a great business model and propels leading franchisors to the top, said both franchisor and franchisee speakers at the summit. And the commitment begins with a serious vetting of potential franchisees.
“The selection process for franchisees has to be brutal,” said Travis, explaining that he’d rather have it that way than to watch people fail.
Franchising provides a lot of strict processing, control and procedures and has so many systems in place to guide franchisees in running their businesses, which gives them a better chance of success than entrepreneurs who start from scratch, said Bob Dorman, a multi-unit franchisee with Five Guys Burgers and Fries.
Franchising helps mitigate traditional business risk — there’s always risk — but it’s a decreased risk relative to other business, added Hank Bharmal, owner of two FASTSIGNS International locations.
Training is a vital element of the support that franchisors provide to their franchisees, but Travis said that some interpret the idea of training too narrowly. It shouldn’t just happen when a franchisee signs on, “I think it has to be an ongoing process,” he explained. “I’m amazed at how interested our franchisees are in ongoing training.”
For BrightStar, the support doesn’t stop with training. When the economy got rough in 2009, the company started a special team called BrightStart to help launch new franchisees and make them money faster, said Sun. The team monitors the progress of new franchisees, and when they see one struggling they go out and use a hands-on approach to get the franchisee back on track.
Franchisors also work to help prospective franchisees secure the funding they need to get started and to aid existing franchisees in securing the money they need to grow. With the recession, though, getting loans has become more difficult and their best efforts aren’t enough, which is why Travis, Sun and other franchisors say they came out to the IFA-hosted summit to work with bankers and regulators, so they will better be able to get their franchisees the funding they need.