People who know me know that I've been around the franchise industry my entire life. I grew up working at a franchise company from a young age and have been involved in several franchise brands as a franchisor and a franchisee, sometimes both in the same brand.
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We would like to thank Dr. Stevie Dawn for this guest blog post. Dr. Stevie Dawn is a keynote speaker and corporate trainer who specializes in emotional intelligence strategies in the workplace. We have found Dr. Stevie Dawn’s workshops particularly helpful as we’ve navigated the unusual challenges of 2020. We chose to share a bit of her wisdom with our readers, many of whom own and operate businesses of their own.
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Those of you who have been in franchising for a while probably remember the Great Recession and its aftereffects. Banks were suddenly facing unprecedented scrutiny, and risk tolerance dropped to zero as they were burdened with new regulations and fail-safes. Loans that had previously flowed to brands were suddenly being held up. Banks wanted franchisors to prove that they had “skin in the game.”
The onus to prove viability shifted from the franchisee (borrower) to the franchisor. Item 19 came into full bloom as brands vied to prove their worth. The smarter franchisors were quick to adapt and complete the requirements for the Bank Credit Report and the Franchise Registry. Many changed their FDDs to show that they were willing to back the franchisee with royalty payments that ramped up other investments. Their financial statements became more detailed. This really wasn’t negotiable; if you wanted franchisees funded quickly for a fast ramp-up, you changed.