Business Franchisor - - EXPERT ADVICE: JAMES SCURR -


Ac­cred­i­ta­tion pro­grams by lenders are an im­por­tant part of the fi­nance of­fer­ings avail­able to the fran­chise net­work. De­spite the number of lenders op­er­at­ing within this space, ac­cess to fi­nance can still be a ma­jor bar­rier for new prospects and can dampen the po­ten­tial growth rate of fran­chise net­works. Gain­ing ac­cred­i­ta­tion with a range of bank and non-bank lenders is some­thing that fran­chisors can do to help in­com­ing and ex­ist­ing part­ners over­come this bar­rier. Ac­cred­i­ta­tion ul­ti­mately es­tab­lishes a frame­work to sup­port long-term growth.

Ac­cred­i­ta­tion pro­grams take into con­sid­er­a­tion how strong a fran­chise net­work is as a whole, and then, based on this as­sess­ment, pro­vide preap­proved fund­ing up to a cer­tain amount for both new and ex­ist­ing fran­chise part­ners. Although this can be a some­what time-con­sum­ing process for the fran­chisor, it is an im­por­tant step for any grow­ing net­work and can be­come the corner­stone of their fran­chise fi­nance strat­egy.

Prior to the rise in pop­u­lar­ity of al­ter­na­tive lenders, bank ac­cred­i­ta­tions were a sta­ple of the fran­chise in­dus­try. How­ever, Aus­tralia’s lend­ing land­scape has seen a tu­mul­tuous time through the bank­ing royal com­mis­sion, and as a re­sult the in­dus­try has seen a di­ver­si­fi­ca­tion of lenders and fi­nance of­fer­ings. Now most banks and al­ter­na­tive lenders of­fer some form of ac­cred­i­ta­tion pro­gram to sup­port the fran­chise in­dus­try, re­sult­ing in a wider range of choices. Ac­cred­i­ta­tion is not a one-size-fits-all so­lu­tion, and fran­chisors should seek ac­cred­i­ta­tion with more than one lender to en­sure that their fran­chisees have a range of op­tions to suit their needs.

While bank ac­cred­i­ta­tion is of­ten the first choice, stricter re­quire­ments mean that this is out of reach for some fran­chise net­works. Bank ac­cred­i­ta­tion pro­grams are of­ten lim­ited to fran­chise net­works of at least 50 units, and place re­stric­tions on the amount of the pur­chase price they will lend, cap­ping it at 50 per cent. Un­for­tu­nately, this makes it an un­re­al­is­tic op­tion for fran­chises that are still in the growth phase or op­er­at­ing a smaller net­work. In ad­di­tion to this, many tra­di­tional lenders have shied away from fund­ing small busi­ness, fran­chises in­cluded, pre­fer­ring to lend in tra­di­tion­ally less risky mar­kets.

De­spite dif­fi­cul­ties with more tra­di­tional lenders, many fran­chise net­works have found suc­cess in opt­ing to ex­plore ac­cred­i­ta­tion with an al­ter­na­tive provider. Non-tra­di­tional lenders have seen heavy adop­tion rates in both the con­sumer and com­mer­cial space, as their more flex­i­ble of­fer­ings al­low for unique fund­ing solutions to fit their cus­tomers’ needs. Their will­ing­ness to take on a higher risk makes them ac­ces­si­ble to small busi­ness own­ers, who are seek­ing the abil­ity to bor­row smaller amounts on more flex­i­ble terms. Non-tra­di­tional lenders have also seen praise for their high lev­els of trans­parency – some­thing that has be­come highly val­ued by con­sumers as mis­trust of tra­di­tional lenders grows.

While some fran­chisors may see ac­cred­i­ta­tion as a tool that only helps in­com­ing fran­chise part­ners, this is cer­tainly not the case. Ex­ist­ing fran­chisees face new ex­penses through­out the life of their busi­ness, and the abil­ity to ac­cess quick and easy fund­ing through ac­cred­i­ta­tion al­lows them to com­mit to re­fur­bish­ments, equip­ment up­grades and ex­pan­sions with­out putting their cap­i­tal at risk. Pro­vid­ing fran­chise part­ners with sim­ple ac­cess to fi­nance forms a plat­form to drive in­ter­nal growth, giv­ing ex­ist­ing fran­chisees the tools they need to take ad­van­tage of new op­por­tu­ni­ties, with­out the de­ter­rent of lengthy ap­pli­ca­tions and ap­proval times. Putting in place an ac­cred­i­ta­tion pro­gram can also en­cour­age adop­tion of fran­chisor ini­tia­tives such as new equip­ment roll­outs, new store de­signs and re­brand­ing ac­tiv­i­ties, as fi­nance is pre-ap­proved.

Hold­ing an ac­cred­i­ta­tion with one or more lenders also acts as a key sell­ing point through­out the re­cruit­ment process. Ac­cred­i­ta­tion adds to the cred­i­bil­ity of a fran­chise brand and re­flects the suc­cess of the net­work over­all. Hav­ing the backing of one or mul­ti­ple lenders is a draw­card that may at­tract prospects to your net­work over oth­ers. Of­ten prospec­tive fran­chise part­ners are well aware of the chal­lenges they face in en­ter­ing a net­work, and gain­ing the fund­ing re­quired to get their busi­ness up and run­ning is one of the most daunt­ing. The ap­peal of a stream­lined re­cruit­ment and on-board­ing process – with­out the stress of seek­ing fi­nance – can aid in re­cruit­ment suc­cess and sub­se­quently fuel net­work growth.

Ul­ti­mately, ac­cred­i­ta­tion is a tool that is ben­e­fi­cial to both fran­chisors and fran­chisees. Be­ing able to of­fer ex­ist­ing fran­chisees pre-ap­proved fund­ing is im­por­tant when en­cour­ag­ing growth, and ac­cred­i­ta­tion with mul­ti­ple lenders gives each fran­chise part­ner the op­por­tu­nity to seek a so­lu­tion that fits their busi­ness’s unique needs. When recruiting new fran­chisees, putting ac­cred­i­ta­tion in place en­sures that qual­ity prospects are never lost due to an in­abil­ity to ac­cess the funds they need to start their busi­ness. Take your fran­chise net­work to the next level through ac­cred­i­ta­tion.

Ac­cred­i­ta­tion adds to the cred­i­bil­ity of a fran­chise brand and re­flects the suc­cess of the net­work over­all. Hav­ing the backing of one or mul­ti­ple lenders is a draw­card that may at­tract prospects to your net­work over oth­ers.”

Fran­chise Fi­nance Aus­tralia is a spe­cial­ist fun­der to the fran­chise sec­tor, with un­ri­valled knowl­edge of fran­chisees’ fund­ing re­quire­ments as well as di­rect re­la­tion­ships with the fran­chise net­works op­er­at­ing in Aus­tralia. Founded in 2014 by di­rec­tors with a back­ground in fran­chis­ing, FFA has re­mained com­mit­ted to of­fer­ing flex­i­ble fund­ing solutions that al­low fran­chisees to start a new busi­ness or im­prove their ex­ist­ing busi­ness.


James Scurr has ex­ten­sive fran­chis­ing and small busi­ness ex­pe­ri­ence, spend­ing al­most a decade as a suc­cess­ful multi-unit fran­chisee for com­pa­nies in­clud­ing Boost Juice, Dreamy Donuts and other in­de­pen­dently owned busi­nesses. He is an in­ter­na­tion­ally recog­nised Cer­ti­fied Fran­chise Ex­ec­u­tive (CFE) and a FRAN­data Reg­is­tered Fran­chise Lend­ing Spe­cial­ist. James founded Cash­flow It in 2014 which now op­er­ates as Fran­chise Fi­nance Aus­tralia.

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