If you’re looking at funding options as a new franchisee and are struggling with the franchise financing options available to you, we’re here to tell you there are options. You can certainly go a traditional route through a bank, but sometimes it just isn't possible. Luckily, there are more non-traditional routes available to you. In this episode, I talk with Apple Pie Capital Chief Development Officer (CDO) Ron Feldman about the ins and outs of financing, franchise validation, resources available to you—and more.
Ron started in the franchise industry when he and his wife purchased into The Goddard School Franchise. He has also worked as the Chief Development Officer at FRANdata and was the Chief Brand Strategist with Siegel Financial Group. Ron gives us insight into his unique and extensive background in franchising that you don’t want to miss!
I first came across Apple Pie Capital when I had already launched two of my franchise locations with Sola Salon Studios—and then the SBA refused to finance the 3rd. Our lending partner was gone. I was an established franchisee with an established brand but was suddenly forced to find a different option. This is where a non-traditional franchise lender became my solution and could be yours as well.
They provide a unique online platform that is a streamlined and simple solution for someone in the franchise industry to source funding. One of the top lenders in the business, their focus is to lower barriers to entry. They do so by handling everything from start to finish, beginning with one easy online application, then laying out all of your options. They actually want to help you achieve your goals and to grow smartly. They are one of the few lenders who only work in franchising.
If you’re looking at buying a franchise but want to jump in on an emerging brand, there are some things you should consider. First, you want to invest in an emerging brand and not a start-up. For the purpose of this explanation, a start-up is a franchise that has fewer than 25 franchise units. An emerging brand is considered a franchise with 25-100 units open and running. If a franchise has sold over 100 units, they are likely no longer relying on the franchise fees for their overhead costs (which is crucial).
So why does this matter?
You need to give a particular franchise time to become a proven brand. Apple Pie is more willing to lend you money faster than any other lender—but they also need a way to measure their investment. If a franchise has 10 or more years of operating history or they have 25 units open for 3+ years APC considers them an emerging brand that they’re willing to dive into with you. Keep listening to our conversation as we cover the details, and talk about some of the resources available for new franchises.
As an emerging franchisor or someone who’s bought a new franchise, you’re going to have a lot to learn. Some great opportunities for learning come from conferences geared towards franchisees. The International Franchise Association hosts a conference geared exactly towards those just starting out in the market. So if you’re newer in the industry, this one is a great place to start.
A couple of other resources that Ron and I both recommend include the UnConference and the Springboard conference. They are founded and hosted by some of the most knowledgeable people in the industry. Events like these can be a great way to learn from others what to do, what not to do, and a way to make lasting connections. Keep listening for another great way to learn the ins and outs of franchising.
One of Ron’s favorite quotes is by Anthony Martino, “franchising is simple, as long as franchisees make money”. While funny, it’s completely on the nose. Apple Pie Capital utilizes research from FRANdata as well as their own personal experience to validate the franchise you’re buying. They’re able to get a lot of data that you as the franchisee don’t have access to.
Likewise, you need to be diligent with your own validation process, which we cover more in-depth in this podcast. You need to reach out to current franchisees and question them about every part of the process. Ron shares that they got more calls from prospective franchisees for The Goddard School when they sold than any of the 10 years they operated it. Listen to the rest of the episode as he explains why this was so smart and the right questions to ask.