Early Growth Capital For Emerging Franchisees

2. Early Growth Capital For Emerging Franchisees Facilitator: Ellen Hui, Managing Director M&A, National Franchise Sales Panelists: Mike Record, SVP/Manager of Program Finance, Restaurant Finance Group Angelo Crowell, CEO, Kalo Restaurant Group Kimberly Crowell, President, Kalo Restaurant Group

3. Franchisee Borrowing Lifecycle Advantages Borrowing Source Disadvantages Fast; flexible; easy Personal Cash Ties up capital Access to capital Friends/Family/3rd Party Can be costly; ownership dilution; can limit future borrowing ability Moderate equity requirements; available for startups SBA Time consuming; excess collateral; higher debt costs Low equity requirements; available for smaller operators Equipment Finance Companies No start-ups; higher borrowing costs; no RE or BV No equity requirements; can finance LB&E together Sale Leaseback/Build-to-Suit Not available for smaller operators; can be expensive; gives up RE ownership Low cost of borrowing; readily available capital Local/Regional/National Bank Generalists No start-ups; banks are restaurant-averse; lack of industry expertise Industry expertise; low cost of borrowing Restaurant Finance Verticals No start-ups; lending to larger established concepts Growth acceleration Sub-Debt/Preferred Equity/2nd Lien Costly; larger operators only; ownership dilution