Federal Agency Announces Direct Loan Program To Help U.S. Franchisors And Overseas Franchisees
Washington, DC-Filling a gap in long-term financing for the franchise industry, George Munoz, president and CEO of the Overseas Private Investment Corporation (OPIC), announced that the federal agency that sells investment products to U.S. businesses would help small-business franchisors expand by extending direct loans to overseas franchisees.
"As the American economy becomes more service-oriented, the practical effect of this change will be to enable U.S. franchises to take root in countries that have traditionally lacked the capital to make their stores work. In effect, OPIC is helping democratize the spread of global capital so that both U.S. companies and prospective overseas partners can benefit," said Munoz. "The only requirements are that the U.S. franchisor be a small business under OPIC's guidelines and that the franchisor be significantly involved through a franchise agreement, the use of the franchisor products, management systems or trademark usage."
OPIC's traditional approach to providing direct loans has been to offer them to companies with 25 percent U.S. ownership or significant involvement of a U.S. company in the transaction. Only small businesses can receive OPIC direct loans. By the updated approach, if the significant involvement standard is met and the U.S. franchisor meets the small-business test, the finance department of OPIC will consider extending direct loans to foreign enterprises that do not have U.S. ownership. OPIC defines a small business as having per annum sales of less than $250 million or, for individuals and entities without sales, a maximum net worth of $67 million.
"OPIC has had a long and fruitful relationship with the franchise sector," Munoz said. "OPIC support has enabled several U.S. franchises, such as fast-food restaurants and hotels, into markets from Latin America to Russia. Today's change will open the doors into countless more markets in the developing world for U.S. franchisors."-OPIC