Franchise Tag Helps Reduce Small Business Loan Risk

July 19, 2013

By Bob Coleman
Editor, Coleman Report

We spoke with Mary Jo Larson, Publisher, Franchise Times about getting capital to large and up and coming franchise brands at the Franchise Spotlight Conference in Irvine, CA.

Bob Coleman: We’re talking with Mary Jo Larson, the publisher of Franchise Times. Mary Jo, welcome, we’re in beautiful Irvine. You had a panel this morning about franchise financing. I want you to first tell me about that in terms of what are the takeaways that your panelists were telling the attendants.

Mary Jo Larson: I think what the panelist were telling the attendees today was that franchise lending, it does carry risk like all other industries do, but there’s some of that that is taken away. That the franchisors, the franchisee first and then if you have the franchise concept and you found that it’s one that you wanted to lend to, you would take some of the risk out of it.

Bob Coleman: You’re an expert in this field. Tell us what you do, what is Franchise Times and what do you do?

Mary Jo Larson: The Franchise Times, I’m a publisher of Franchise Times magazine. We publish Franchise Times and The Restaurant Finance Monitor which is a publication that goes out monthly, we’ve been doing that since 1990. And for both publications we want to inform the reader, the franchisees, the franchisors, we want to inform the readers about financing and then also with Franchise Times, all other types of finance as well.

Bob Coleman: The last five years have been terrible, we use that word for a lot of your readers, your industry. From your pirch do you see things any better? Is access to capital loosening out in your part of the world, specifically restaurant financing?

Mary Jo Larson: Yes. Definitely it is loosening up. The big brands are definitely getting capital. Those franchisees are definitely not having to run around. The smaller brands are starting – I’m starting to hear some of the national lenders talk about going down the tiers which means they’re starting to go to younger brands, maybe taking a look at those a little bit more because it is so competitive right now for those big brands and so they want the deals for those big brands.

Bob Coleman: That’s good news and you’re seeing that, you’re seeing that.

Mary Jo Larson: Yes, yes.

Bob Coleman: What about other types of industries, hospitality, we hear there’s problems in that. What do you see?

Mary Jo Larson: I think that hospitalities tend to continue to struggle a little bit. I don’t think all of this is over. I think that a lot of brands are still going to struggle and I think they should be working with lenders, they should be meeting them, they should be working with them to try to get – and I’m surprised that more don’t do it to get their
franchisees financing.
Bob Coleman: Tell us about – you have a great event in October, Restaurant Franchise Financing.

Mary Jo Larson: Yes.

Bob Coleman: I spoke at it a couple of years ago where you bring the brands together with the lenders. It’s focused on financing. Tell us about it, when is it, and I would encourage people to get on a plane and go to Vegas, but I’ll let you do the spiel.

Mary Jo Larson: Who doesn’t love Vegas?

Bob Coleman: There you go.

Mary Jo Larson: A Restaurant Finance and Development Conference November 4th through the 6th at the Wynn Hotel in Las Vegas.

Bob Coleman: Nice.

Mary Jo Larson: It is really a chance for lenders to meet with multi-leader restaurant operators, franchisees, franchisors, and also independents that are larger multi-unit operations and we’ll have about 2000 people there this year. Just a really great event where networking and deal making is key.

Bob Coleman: Mary Jo Larson, publisher of Franchise Times, thank you for joining us.

Mary Jo Larson: Thank you. I appreciate it, Bob.