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What Franchises Should Look for In a Bank

What Franchises Should Look for In a Bank


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.

4 min read

This story appears in the
April 2019

issue of
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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

2Banking 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…

APersonalized 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.”


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