On January 23, BoeFly hosted a CDO summit in Tampa, Florida. Top executives from many of BoeFly’s partner franchise brands gathered to discuss all things franchise development strategy, from real estate for franchisees to private equity in franchising and more.
Keep reading to learn more about what these industry experts shared at this first-ever event that’s slated to become an annual tradition.
Real estate for franchisees: When does the search process start?
One of the earliest — and biggest — hurdles for a new franchise owner is selecting a location for their franchise. We asked our CDOs when they felt it was best to start searching for real estate options. Answers varied; some were comfortable starting the search before the franchise agreement was signed while others preferred to wait until after signing due to the amount of work required to look for a location.
The challenge for every new owner is finding the right location at the right price. All CDOs stressed the importance of staying engaged throughout the process and continuing to support the franchisee’s search for real estate while developing the market at the same time to create a strong presence. Our CDOs agreed on the importance of vetting a potential franchisee’s financial qualifications and commitment to the brand before starting the real estate search. Their comments underscored the importance of starting the funding process early. Getting their loan in motion sooner also helps franchisees ensure that their opening isn’t delayed by a financial roadblock that could have been avoided if there had been more time.
BoeFly plays an important role in this process by helping franchisors vet their candidates faster and matching franchisees to the right lender for their needs.
Multi-unit deals: Why do they matter?
All CDOs agreed on the power of multi-unit development agreements (MUDAs) to grow brands, build awareness and penetrate a target market faster. Franchisees with the capital to make a larger investment can grow their portfolio under the umbrella of a stable, proven brand. Multi-unit owners also benefit from the opportunity to share resources across locations and standardize their operations for a more consistent customer experience.
For franchisors, signing a multi-unit franchise agreement means that many processes can be streamlined, from owner support to operational issues. Fewer individual franchisees makes it easier to align on issues and reduces complexity.
The team at BoeFly has the experience needed help franchisees that are interested in MUDAs find funding. “I know it is always important to look ahead and reduce any obstacles,” says Hand & Stone Multi-Unit Owner, Eric Danver. “BoeFly did just that by promptly securing competitive financing for us to secure more units.”
Private equity: How does it help a franchise grow?
Private equity in franchising refers to investment firms that buy into franchise brands to grow the business and increase value. Capital from private equity allows brands to fuel growth, scale operations and increase profitability. It’s becoming more prominent as both franchisors and franchisees increasingly view it as an important part of their franchise development strategy.
Investment firms have been showing increased interest in franchisees that own a proven concept, often purchasing locations from a multi-unit owner. Private equity firms bring a level of expertise and strategic guidance that can improve operational processes, enhance marketing and help franchisees grow at a faster pace. Financial resources from private equity can help a brand scale quickly, enter new markets and invest in technology, with the additional capital helping franchisors execute on growth plans that are critical for the brand’s long-term success.
One important note from a private equity expert that attended the event is that most brands do not address private equity in their FDDs. As we enter FDD season, this may be a change to consider for brands that want to align their franchise growth strategy with their interests.
BoeFly is here for all your franchise funding needs
BoeFly continues to lead the way in franchise funding solutions thanks to more than a decade of industry experience combined with smart tools and personalized service. Whether you’re a franchisor that’s ready to grow your brand as part of your franchise development strategy or a franchisee that’s seeking financing, BoeFly is here to help. Our bVerify tool is a safe, secure portal that collects financial information from potential candidates and allows franchisors to vet and qualify them. Once qualified, we help match franchisees with the right lender for their funding needs. Ready to connect with us? Click on the link below that best describes you to get started now.
