The boutique investment firm’s founder and CEO on how financing has evolved to meet the needs of franchise investors.
Trinity Capital LLC opened its doors in 2000, but the independent investment banking firm has been operating in one form or another since the mid-‘90s, when Kevin Burke pulled together a team of finance experts to provide financing, restructuring, and M&A services for clients in a variety of industries.
Since then, Trinity Capital has closed more than 500 transactions exceeding $20 billion. Those deals include capital-raising and restructuring for investors working with some of the largest brands in franchising, including Taco Bell, Panera Bread, Benihana, Ponderosa Steakhouse and Long John Silver’s.
We talked to Burke to learn how Trinity Capital has approached franchise financing, and what sets them apart from other lenders.
How does Trinity Capital help franchisees secure financing for new franchise investments?
Burke: Trinity is continuously engaged in the marketplace, advising clients on the sale and acquisition of restaurants in the top 100 concepts. Accordingly, we are well-informed about availability, pricing and other logistics around the sale of restaurants. We work with our franchisee clients to improve their profile within their franchise system, ensure they have optimal financing and provide them a continuous stream of leads on transactions in the franchise restaurant category.
Does Trinity Capital work directly with franchisors at all?
Burke: Trinity has worked for some of the leading franchisors over the years, which we believe has provided us with meaningful relationships and industry insight. We also have the nation's leading practice in Franchisee Association representation.
What do you look for when vetting franchise investors for financing?
Burke: We look for good concepts, excellent management teams and opportunities that have meaningful upside and opportunity.
What advantages does Trinity Capital bring to the table over other lenders?
Burke: We provide our clients with a menu of debt and equity options, and we work carefully with them to understand the advantages and disadvantages of each option. Moreover, we have the franchise restaurant industry's leading relationship set with institutional investors, such as family offices, private equity and pension funds. We believe that presenting our clients with the optimal amount of competition and options results in the ideal outcome for each particular client.
We believe that success in our industry starts with solving any given client’s challenge on their terms, timing and pricing, and we have the wherewithal to make that happen.
Are you seeing any changes in the way the franchise industry is approaching financing?
Burke: Financing in the restaurant industry has become much more sophisticated with respect to risk analysis, loan documentation and innovation. In addition to senior bank financing, Unitranche, Term B loans and second liens, financing have become very popular with larger franchisees. Also, traditional bank financing has become much more sophisticated and flexible to meet the needs of franchise borrowers.