From Nu Wire Investor It used to be that prospective franchisees positioned to start a franchise business would secure financing from a bank, but more of these people are finding banks unwilling to lend to them.
This is putting the squeeze on parent companies and now some of them are creating lending opportunities for interested investors by partnering with banks to guarantee against losses or other otherwise secure funding.
Some of these franchises include Marco’s Pizza, Weed Man, Fastsigns and the UPS Store.
Critics argue this could create conflict between franchisors and franchisees, but options remain limited in the struggling U.S. economy. For more on this continue reading the following article from TheStreet.
A lack of capital and uncertain economy is deterring franchisees from opening locations and wreaking havoc on parent companies' growth plans. If the banks aren't doling out money, how will they ever expand and hire?
One way is for a company to take financing in-house -- whether by partnering with banks, creating financing arms to help franchisees through the lending process or securing private equity financing on more acceptable terms.
Not everyone's in love with the idea.
Read the rest of the article here.