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Franchise Buying Guide

Show Me the Money

Smoothie Sailing
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Lei Kaniaupio and Dmitri Spadaccini knew they were facing some heavy competition with their Robeks franchise in Honolulu, but the husband-and-wife team believed in the concept. A business development employee turned stay-at-home mom, Kaniaupio loved that the smoothie franchise was a lifestyle brand promoting healthy eating and living. "Hawaii's market is so perfect for this product," says Kaniaupio, a vegetarian. "It's not just smoothies-it's sandwiches, soups, muffins, etc. Our whole concept is based on this healthy attitude." Kaniaupio and Spadaccini, a former general manager facilitator, decided they wanted to be franchisees and regional directors for the franchise in Hawaii, which essentially meant they needed not one, but two loans.

While Robeks offered a few financing options, Kaniaupio, 42, and Spadaccini, 40, quickly found out those options wouldn't work because the couple was thousands of miles away from the contiguous United States. Initially, their island paradise home appeared to work against them-that is, until Bank of Hawaii, which is widely known to be one of the most conservative banks there, granted the couple a loan. Says Kaniaupio, "The fact they actually funded us was quite a feat."

When starting the financing process with Bank of Hawaii, Kaniaupio found herself in a Catch-22. "The bank wants you to have a location set and all your facts and figures based on that location. The landowners or managers want to know you have your financing, so it's a tricky balance." She was able to get both sides to work with each other and is now in negotiations with some Hawaiian property managers to eliminate this hurdle for future Robeks franchisees.

Another problem came with the large loan amount. Initially seeking 100 percent financing, "I realized it would take my firstborn as collateral," jokes Kaniaupio. "There's a big difference between partial and full financing." The couple instead received $135,000 in financing through Bank of Hawaii. The rest came from savings and family members.

As far as funding for the regional directorship, Kaniaupio turned to a government agency, the Office of Hawaiian Affairs, wanting to keep her franchise loan separate. "OHA is very into helping Hawaiian entrepreneurs," says Kaniaupio. She took a required eight-week course before getting approval for a loan set at 2 percent for five years, with the first six months being interest-only. OHA funded the maximum of $75,000; Kaniaupio and Spadaccini came up with the rest from savings and family.

With all the financing obstacles they've overcome, Kaniaupio and Spadaccini believe they've truly blazed the trail for any future Robeks franchisees in the state. "We're opening the way for people coming on," says Kaniaupio. "They'll see how an existing business is doing and will have something to compare [their businesses] to."

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This article was originally published in the September 2005 print edition of Entrepreneur with the headline: Show Me the Money.

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