Recipe For Success

Nontraditional lending programs are bringing financing within reach of restaurant franchisees. Franchise Mortgage Acceptance Corp. (FMAC), a cash flow-based lending company in Greenwich, Connecticut, opens doors for restaurant franchisees who have trouble finding financing elsewhere.

"[Often, franchisees] can't qualify for institutional debt, where they can get reasonable rates," says Thomas J. Shaughnessy, senior vice president of FMAC.

The strategy, which FMAC calls "debt securitization," differs from traditional collateral lending and its emphasis on assets. "We're a cash flow lender," says Shaughnessy. "It's based on the ability of units to generate cash flow."

For franchises such as Don Harty, the cash flow lending system seems heaven-sent. "[FMAC] understands the restaurant industry," says Harty, who owns three Burger King franchises in New York City. "Usually, we have to educate lenders about the restaurant business, but [FMAC] understands the low rate of failure of franchised restaurants and that the integrity and ability of the operator is the most important thing."

Harty, a Burger King franchisee for 20 years, believes companies like FMAC are the best route for financing franchised restaurants. Says Harty, "They really made it painless."

Contact Sources

Burger King Corp., (305) 378-7277;

CKE Restaurants Inc., P.O. Box 4349, Anaheim, CA 92803-4349, (714) 774-5796;

Franchise Mortgage Acceptance Corp., 5 Greenwich Office Park, Greenwich, CT 06831, (800) 884-3622;

Great American Cookies, 4685 Frederick Dr. S.W., Atlanta, GA 30336, (800) 336-2447, (404) 696-1700;

Sen. Donzella J. James, (404) 656-0049, http://www.ganet.org;

Manhattan Bagel Co. Inc., 246 Industrial Wy. W., Eatontown, NJ 07724, (800) USA-BAGEL;

National Franchise Mediation Program Steering Committee, 14841 Dallas Pkwy., Dallas, TX 75240-2100, (972) 338-7661;

The Neighborhood Dry Cleaning Co. Inc., 75 N.E. Federal Hwy., #104, Delray Beach, FL 33483, (800) 697-1811, (561) 272-2797;

The Southland Corp., (214) 828-7345;

Thrifty Rent-a-Car Systems Inc., (800) 532-3401, (918) 669-2861;

Valvoline Instant Oil Change Franchising Inc., P.O. Box 14046, Lexington, KY 40512, (800) 622-6846;

Young Entrepreneur's Camp, Brookdale Community College, 765 Newman Springs Rd., Lincroft, NJ 07738, (908) 224-2738.

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This article was originally published in the July 1997 print edition of Entrepreneur with the headline: Recipe For Success.