Is it Time to Franchise?

By: Raj Tulshan, Founder of Loan Mantra

The Casual Pint, a craft beer shop and bar, opened its first location in 2011 and their first franchise two years later. Since then, they’ve steadily expanded. Now, they have 20 franchises in eight states, and have found the franchise model to be lucrative for their business – and a great way to grow their brand.

  Part of the Casual Pint’s success is a combination of a solid concept with the right set of circumstances to succeed. First, they have a stable infrastructure in place that can be replicated in other locations.  They also provided all necessary resources to their franchisees, including market research, architectural design, and marketing and sales materials. They’ve ensured that the owner of each franchise was heavily involved in their communities, a model they’ve implemented from their very first shop. Additionally, each location promotes themselves as a community gathering place that provides exceptional beer, and the business is thriving.

  Franchising, like The Casual Pint, can work really well. Consider these stats:

●   90% of franchisees enjoy operating their

      business.

●   88% enjoy being part of their organization.

●   85% feel positive about their affiliation with their franchisor.

●   80% feel their franchisor operates with a high level of honesty.

●   78% would recommend their franchise brand to others.

●   73%, given the option, would do it all over again.

  Independently owned businesses looking to grow can explore whether franchising would be a good solution for their unique situation. Here are some things to consider before you decide whether to franchise:

  Are you ready to sell your brand concept? To be successful, you’ll need more than just a savvy business concept. Before you franchise, determine whether you can clearly explain what your brand is, what it does, and its unique value proposition. Remember: you’ll need to be able to clearly articulate your brand and your vision to key audiences, including investors and potential franchisees, to entice them to get involved.

  Do you have a solid structure in place? Your franchisees will need to replicate your business model and operational structure for marketing, sales, technology, etc.  So, you’ll need to have strong systems and processes in place before diving into franchising. Expect to hand over ready-made “toolkits” for your franchisees to use in their day-to-day operations. Allow plenty of time to develop these concepts, plans, and materials.

  Can your business be replicated? Is there a market for your business elsewhere? Could someone else run another location as well as you do? For a company to thrive as a franchise, it must be replicable. The Casual Pint found success as a community-focused meet-up space with amazing beer, and it didn’t matter if the community was in Tennessee or Arizona. The concept translated well in different locations, and can continue to grow and thrive anywhere.

  Are you ready to scale your passion? Are you ready to teach and manage others on a larger scale? Are you comfortable stepping back from the daily operations and focusing more on franchise management? For example, if you’re a craft beer maker, once you decide to franchise, you’re no longer going to be hands-on with beer brewing.  You’ll be focused on running a franchise to sell your beer, and teaching other people how to brew it, sell it, market it, etc. You’ll also be helping your franchisees get set up with real estate, construction, hiring staff, etc. Are you ready to scale your passion, overseeing several others in a new and amplified managerial role?

  Are you ready to build a dream team of outside experts? It’s essential to consider hiring knowledgeable professionals to help you through the entire process of developing your franchise model, preparing the necessary documents, and navigating the finances, including securing loans. You’ll need to hire financial professionals who specialize in accounting, loans and assisting business start-ups, as well as, specialized franchise attorneys to assist in the drafting of your paperwork. 

  Are you ready to invest in the business’s future? Expect to invest personally in the venture, which may require a business loan. Also, you may need to recruit investing partners to help manage the expenses. Anticipate a variety of costs, including brand development, experts’ fees, legal fees, and outreach to potential franchisees. You’ll need significant capital to launch your franchises, so think about how you will raise the necessary cash.  Many people choose to divest a 40IK, start with personal savings or take loans from family to start their first franchise. Others seek out investors, small business loans and  lines of credit.

  Have you researched funding? There are several different ways to fund a franchise. Seeking out an experienced loan advisor that you can trust can save you time and money. For example,  Loan Mantra has relationships with all types of franchise lenders, so even if you don’t know the exact kind of funding you need, we can help you determine the right loan package. Anecdotally, bankers and financial experts notice significant cycles to franchise funding. In January, more franchisers will seek equipment loans; whereas in the summer months, specifically July & August, they often seek more inventory-based loans (e.g. a cyclical  inventory such as football jerseys to sell in a bar or other seasonal products).   Regardless of season, 7a loans are always a significant source product for franchise funding. Most franchise lenders will attempt to use a 7a product first, followed by direct equipment company loans, followed by loans given by manufacturers. The franchisor will usually have a set deal with an equipment company and negotiate those terms out front.

  What will attract franchisees to buy into your concept? Be the brand that you represent. Personally meet with potential owners and attend area trade shows. Be easy to do business with. Streamline your business processes. Loan Mantra’s franchisors are able to house all of their franchise contracts, financing applications, and associated documents online through the BLUE platform, allowing their franchisees to complete everything online, without having to meet in person or send by snail-mail. The way you do business tells others something about you. Working through an antiquated analog system may tell them you’re antiquated, whereas using today’s tech tools will tell them you’re ready for the future.

  If you’ve considered most of these points this may be the time to franchise your passion!

About the Author

  Neeraj (Raj) Tulshan is the Founder and Managing Member of Loan Mantra, a financial advisory firm with best-in-class and proprietary fintech, BLUE (“Borrower Lender Underwriting Environment”). Loan Mantra, Powered by BLUE, is next-level finance: a one-stop-shop for business borrowers to secure traditional, SBA or MCA financing from trusted lenders in a secure, collaborative and transparent platform.

  After graduating from Ithaca College in Finance, Tulshan began his banking career at Merrill Lynch in New York City. He spent more than a decade in the Currencies, Commodities and Investments Group where he also worked with global asset-backed securities, structured products and principal investments. There, he also originated and underwrote deals valuated over $100 million and structured finance transactions.

  When the market crashed in 2008, Raj saw a significant opportunity to fix the fractured lending ecosystem. Soon thereafter, he sought after and completed an MBA from the Said School at Oxford University and began developing Loan Mantra. His goal was to remove the silos that exist between lender and borrower using secure financial technology. Though Tulshan continues to be iterative with his fintech, meeting current demands of both market and borrower, his professional mission and good- natured approach with clients remain the same. In this, Loan Mantra displays its founder’s proud partnership between best-in-class fintech and top-marks human experts. Time-and-again, clients turn to Raj because they know he will always pick up the phone and offer unparalleled financial counsel in a remarkably human —even friendly—way.

About Loan Mantra

  Loan Mantra is a financial services company designed to serve small and medium businesses with offices in New Jersey, South Carolina and New York. At Loan Mantra your success is our success. This means that our attention, purpose, and intention are all focused on you, our client.  We are your ally to overcome obstacles, bringing peace through uncertain times to achieve your highest goals and aspirations. Your friendly, responsive agent will listen respectfully, and service your account actively through one of three locations in the US.  We speak your language whether it’s English, Spanish, Hindi, Bengal, Hospitality, Laundry or QSR, let us help you today. Connect with us at www.loanmantra.com, 1.855.700.BLUE (2583).

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