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

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."

Wavy Line
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.

Editor's Pick

A Father Decided to Change When He Was in Prison on His Son's Birthday. Now His Nonprofit Helps Formerly Incarcerated Applicants Land 6-Figure Jobs.
A Teen Turned His Roblox Side Hustle Into a Multimillion-Dollar Company — Now He's Working With Karlie Kloss and Elton John
3 Mundane Tasks You Should Automate to Save Your Brain for the Big Stuff
The Next Time Someone Intimidates You, Here's What You Should Do
5 Ways to Manage Your Mental Health and Regulate Your Nervous System for Sustainable Success

Related Topics

Business News

'Do You Hate Me?': High School Teacher Shares Wild Emails He Receives From Students

Jordan Baechler teaches high school students in Ontario, Canada.

Business News

After Being Told They Could Work From Home Forever, Employees Made Major Life Changes. Then, a New CEO Ordered Them Back to the Office.

Farmers Group CEO Raul Vargas is facing backlash for the change, but he says being in the office brings more "collaboration" and "innovation."

Growing a Business

Do You Say 'Like' Too Much? Don't Worry! I'm a Sociolinguist, and I Like 'Like.'

The modern use of the word is denigrated through and through. But it may be doing more communicative heavy lifting than we give it credit for.

Life Hacks

The Top 5 All-Time Best Productivity Hacks You've Never Heard Of

Want to combat chronic procrastination? Use these top five productivity hacks to put an end to this debilitating nuisance.