Franchising continues to be a powerful force in the U.S. economy according to the recent April Franchise Finance Index, the monthly snapshot of the franchise lending landscape conceived and built by BoeFly and 1851 Franchise with the prospective franchisee in mind. However, in order for franchising to remain one of the most powerful job creators in the country, franchisees need to be able to grow and open more units. In order to further break down those barriers to franchise ownership, 1851 Franchise and BoeFly released the April Franchise Finance Index with data sourced from bQual, a tool developed by BoeFly that is transforming the sales and financing components of franchise development.
Financing statistics were sourced from franchisee activity of brands that account for approximately 9,000 franchised units around the country. These franchise brands use bQual to educate prospective franchisees about their prospects of securing financing by providing them a clearer view of their vital financial details and an overall fundability assessment of their loan outlook. Ultimately, the impact is twofold—it helps the franchisees by giving them the insight they need to move forward with confidence, which in turn delivers the franchisor a meaningfully higher lead-to-franchise sales conversion rate.
In April, the top three most active states for franchise financing according to the Franchise Finance Index were Texas, California and Florida. Applicants’ average liquid assets were $200,592 and their average retirement savings were $236,652. The average FICO score was 748.61 and the average business credit score (SBSS by FICO) was 191.59, which is the score required by Small Business Administration.
The April Franchise Finance Index compared to the March Franchise Finance Index showed a .4 percent decrease in FICO score, a .7 percent decrease in average business credit score, a 22 percent decrease in average liquid assets, and a 23 percent decrease in average retirement savings. What these changes show are that more people with less money or lower credit are looking for a franchise opportunity. It also dispels the myth that only wealthy people with perfect credit can invest in a franchise and develop their own small business.
To view the infographic of the April Franchise Finance Index, click here.