Franchise Financing: BoeFly

Unlike most of the other institutions profiled in our Franchise Financing series, BoeFly does not actually provide loans to investors. Instead, the online marketplace connects commercial investors with the most appropriate lenders for their projects. Even for experienced business owners, the financing process can be a mysterious and convoluted process, with lenders’ vetting thresholds shifting with every change in the market. BoeFly was designed to simplify the process by helping business owners prepare financing requests for the lenders most likely to deliver based on the candidate’s credit profile and investment plan.

We talked to BoeFly CEO and Co-Founder Mike Rozman to learn how the brand has become one of the most useful tools for franchisees to secure financing for their businesses.

How does BoeFly help franchisees secure loans for new franchise investments?

Rozman: The first thing do is make sure they are educated about their financial wherewithal. We will typically provide the candidate with a snapshot of their current financial picture. That alone does them a great service by educating them about their options and showing them where they stand.

The next thing we do is build a well-documented financing request. We provide the candidate with a dedicated rep on our team who is going to capture the key documents we know lenders will ask for, and then prepare a bank-ready financing request.

We are ultimately going to match each candidate up with the right lender or lenders to provide the best financing options.

For lenders, our online marketplace allows banks and other lenders to source deals they wouldn’t otherwise find. And then we can match them up with candidates depending on their financing options.

Does BoeFly work directly with any franchisors?

Rozman: A lot of franchisors will use BoeFly to help qualify franchise applicants. We do diligence on applicants on behalf of the brand. We do full criminal background checks, credit checks and every other piece of vetting. That includes a financial pre-qualification. So not only are we establishing the applicant’s financial wherewithal for the brand, we are also delivering a financing proposal right back to the franchisee.

What are you looking for when vetting franchisees for a brand?

Rozman: For a franchise, we know the vetting process will require three components: credit report, criminal background check, including federal- and down to county-level and verification of liquidity and net worth. Independent of that, we are always looking at tax returns, the business plan, financial projections and overall financial health.

What advantages does BoeFly bring to the table for franchise investors over other loan brokers?

Rozman: The diligence we provide is unique and extremely valuable. We also have a tool called bQual that lets investors know immediately if they meet the requirements to apply for a given brand. That’s just one example of how we streamline the process and put everything in very clear, simple terms, which is hard to find in this industry.

What advice would you give to a rookie franchise investor?

Rozman: If you think about the type of person who turns to franchising, it’s often someone who is ambitious, and they like to follow a process. They may not be an innovator. They want to own a business with a well-established operations model. So someone with that mindset isn’t likely to want to dive into financing alone. Too often, local banks aren’t really going to understand financing for franchises, so it’s important that the investor find proper help. That’s largely why we started BoeFly, to provide a well-curated process with some serious hand-holding, which is important for a lot of franchise investors.

Have you noticed any changes in the way franchises and franchisees are going about financing?

Rozman: I think a lot of lenders are thinking more programmatically. They want to evaluate a franchise brand, rather than the investor, and get comfortable with the system as a whole. Once lenders are comfortable with a concept or brand, they start lending within that brand or concept. That’s a strategy that’s been bubbling up for a little while.

Franchises are also being much more selective. It used to be that they would sign up anyone who could sign a check. Now they are much more careful to make sure they are selecting owners who have the wherewithal to actually run the units, which is definitely a good thing for both franchises and franchisees