📺 Stream EntrepreneurTV for Free 📺

What Franchises Should Look for In a Bank Industry vets offer up advice on finding the financial and lending partner that works for your business.

By Stephanie Schomer

entrepreneur daily

This story appears in the April 2019 issue of Entrepreneur. Subscribe »

Nuthawut Somsuk | Getty Images

1. Find a Bank You Can Grow With

From James Short, director of food franchise finance, BBVA Compass

Our franchise-specific team exists as a vertical system within the bank, which means when people come to us looking for financing, we start off with a Small Business Administration program that will finance single units to individual franchisees. One of the toughest things for a franchisee is growing from one unit to multiple units, whether it's two or 10. But we can help them do that through our SBA program, and once they reach a certain size, we flip that into a conventional loan, where we have a little better availability to capital. So franchisees can have a full life cycle within our bank.

But we also see plenty of owners come to us, and they've grown and grown but have never taken the time to collapse their capitalization structure. We've seen a 50-unit operator using 20 different credit facilities -- that's incredibly stressful! We recommend collapsing that all into one loan, taking advantage of embedded equity, and finding a bank that can offer a development line of credit that can be used for a multitude of projects. We, for example, don't require budgets, and we don't require invoices: It's all true enterprise lending based on the value of the brand. Our franchise clients, they operate restaurants -- they're not finance people. We know what they need. If you go from 20 credit agreements to one, you get so many efficiencies. Your life will be easier, and you'll save money, too.

Related: What Franchises Should Look for in a Law Firm

2. Banking Benefits

From Bob McQuillan, VP of franchise development, Hand & Stone Massage and Facial Spa

Hand & Stone operates more than 400 spas in North America. As the business has evolved, its banking and lending needs have, too. The franchise-­focused ApplePie Capital has provided it with…

A. Personalized support.

"They go beyond just your traditional lender," McQuillan says. "We actually have our own portal site built within ApplePie's website, so we can track all of our company's deals -- not only when a franchisee opens a first location, but as they grow to their second and third, too."

Related: 5 Recession-Resistant Franchise Sectors You Should Consider During an Economic Downturn

B. Franchisee outreach.

Hand & Stone's franchisees work directly with ApplePie, which even helps the franchise with outreach. "They present at our discovery day meetings, where potential franchisees come to learn about the company," McQuillan says.

C. Growth planning.

As Hand & Stone has expanded from massages to skin care and waxing, store sizes have grown considerably. "Existing franchisees have taken over the space next door, in some cases," he says. "As a lender, ApplePie has helped us through those changes."

Related: 20 Franchises You Can Launch for Less Than $75,000

3. Unexpected Success

From Josh York, founder and CEO, GymGuyz

What he expected: The founder of the 11-year-old fitness brand has had lofty goals from day one: "We're going to be the largest fitness brand in the world." In working with both Capital One and Webster Bank, he wanted partners who could help him plan for a big future.

What he got: York was surprised how bank support went beyond numbers. "We've done workouts in the banks, after hours," he says. "Relationships are so important. If I wouldn't have someone over for dinner, I won't work with them."

Stephanie Schomer

Entrepreneur Staff

Deputy Editor

Stephanie Schomer is Entrepreneur magazine's deputy editor. She previously worked at Entertainment WeeklyArchitectural Digest and Fast Company. Follow her on Twitter @stephschomer.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Side Hustle

These Coworkers-Turned-Friends Started a Side Hustle on Amazon — Now It's a 'Full Hustle' Earning Over $20 Million a Year: 'Jump in With Both Feet'

Achal Patel and Russell Gong met at a large consulting firm and "bonded over a shared vision to create a mission-led company."

Business News

These Are the 10 Most Profitable Cities for Airbnb Hosts, According to a New Report

Here's where Airbnb property owners and hosts are making the most money.

Business Ideas

63 Small Business Ideas to Start in 2024

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2024.

Side Hustle

How to Turn Your Hobby Into a Successful Business

A hobby, interest or charity project can turn into a money-making business if you know the right steps to take.

Starting a Business

This Couple Turned Their Startup Into a $150 Million Food Delivery Company. Here's What They Did Early On to Make It Happen.

Selling only online to your customers has many perks. But the founders of Little Spoon want you to know four things if you want to see accelerated growth.


All Startups Need a Well-Defined Brand Positioning Statement. Here's a 3-Step Framework to Help You Craft One.

Startup founders often lack time but they should invest resources in identifying a winning brand position that will then drive all their strategic decisions.