Between a volatile economy and uncertainty among business owners as to how much money consumers will spend on products and services over the course of the next few months, the financing landscape within the franchising industry is constantly changing. That means companies like BoeFly, a premier online marketplace connecting business borrowers with the right lenders, are looking ahead to determine what this means for the future of franchising funding.
The ability for franchisees to secure proper financing directly impacts brands’ expansion efforts on the corporate level. Mike Rozman, co-founder and CEO of BoeFly, says that for the past 24 months, lenders have been more willing to finance franchise transactions, putting local business owners in a position to move forward with their entrepreneurial efforts. However, this trend may not continue.
“The franchising industry—and the labor market in general—are in an odd place. There’s still some anxiety about what the credit markets look like, and the Fed is still deciding when it will raise interest rates again,” said Rozman. “I think there’s reasonable concern that either rising rates or general headwinds in the market are going to change the way franchisors manage their sales efforts.”
These changes ultimately determine whether or not franchisees are able to make initial investments or expand to multi-unit ownership. That means it’s especially important for brands and their local business owners to be educated up front about their best funding options.
Papa Murphy’s, the nation’s fifth-largest pizza chain that’s known for its unique take-n-bake model, is utilizing BoeFly’s bQual service in order to help its franchisees further progress and engage with the brand. The service allows prospective candidates to get educated about what their financial capital looks like. BoeFly uses a soft credit pull—that doesn’t impact credit scores whatsoever—to provide them with the same data that lenders will use to ultimately judge them.
“We’re trying to get our franchisees involved with financing earlier in the process in order to move things along. When candidates give us their bQual report, we’re better positioned to get them financing so they can hit the ground running,” said Gary Payne, Papa Murphy’s vice president of franchise sales.
Beyond bQual, BoeFly is also helping brands accelerate the time it takes their clients to go from applications to actual financing. It’s doing this through its bVerify service, which anticipates the hurdles candidates might face when going through the financing process.
With the current state of funding in the franchising industry being so uncertain, Rozman predicts that more brands will begin to utilize these services and recognize the real concerns that local business owners have about financing.
“Smart brands are already being more deliberate in their franchise sales processes. They’re making sure they’re only working with those candidates who are most likely to secure financing,” said Rozman. “As the financing landscape continues to evolve across the entire franchising industry, we’re definitely going to see more brands stress the importance of educational efforts for their franchisees”
