Funny Money

Franchise Fee: $8,300
Initial Inventory: $20,000
Uniforms: $300
The Satisfaction Of Being Your Own Boss: priceless
For everything else, there's MasterCard. Not to mention American Express, Discover, Visa and a slew of other credit cards. Take it from Bernie Mexicotte, former vice president of what is now Bank One. En route to buying a Luxury Bath Systems franchise in Flint, Michigan, Mexicotte slammed right into a financing roadblock. His money was tied up in two other businesses, and despite his excellent credit, lenders were unwilling to grant him a loan to invest in a then-unknown franchise concept. He was even rejected by the bank he'd worked at for 21 years.

Drawing on the power of plastic, Mexicotte racked up $75,000 in cash advances and charges. In all, he used 27 credit cards to cover start-up costs and eight months of operating expenses.

Detoured by similar roadblocks, many franchisees map out alternate avenues to financing-some on their own, some with counsel, but rarely with quite as much risk as Mexicotte. Let's meet some of the more creative treasure hunters:

• Todd Recknagel, 37, founder and managing partner of a mezzanine banking firm. Recknagel enlisted support from four wealthy investors who guaranteed the bank would be repaid its $500,000 loan for a five-unit Blimpie International Inc. franchise in western Michigan.

• Tom Stringer, a 39-year-old chemical engineer with Kimberly-Clark. Stringer was a clueless prospective franchisee with fledgling franchisor Computer Doctor until a consulting firm groomed and guided him toward a $115,000 loan to open his Indianapolis franchise.

• Jo Ann Foley, a laid-off machinist. With the help of a college counselor, the 49-year-old and her husband, Robert, 56, got a bank that had already turned them down to finance their $27,000 Curves for Women franchise in Galax, Virginia.

• Mark Teears, 39, a project manager for a software developing company in Southern Maryland. Teears was rejected by bank after bank-not to mention venture capitalists-on his bid for $60,000 to open a The Cleaning Authority franchise in Raleigh, North Carolina. Thanks to a helpful trio (a consultant, an existing The Cleaning Authority franchisee and a sympathetic banker), Teears broke through his financing roadblocks.

Paul DeCeglie, a freelance business writer in Los Angeles, is a former reporter for American Banker and Journal of Commerce.

This article was originally published in the January 2001 print edition of Entrepreneur with the headline: Funny Money.