Blog Hotspot for Franchise News ...

The Small Business Administration is a big player in American small business. We’ve been doing a good bit of thinking on what the SBA can do for franchises in recent weeks.

You’ve might have watched the interesting video that Joel Libava produced for Franchise Direct about our SBA-approved franchises. It’s a really topical discussion for anyone on the verge of investing in a franchise. Then Monday, Entrepreneur magazine published a long interview with Susan Mills, the head of the SBA, who was marking her second year in the position.

If you’re interested in the politics of small-business funding, this interview will appeal to you. Of all the jobs that President Obama was handing out after his election, head of the Small Business Administration was certainly one of the more challenging ones, and despite the difficulties, Mills seems to feel that the SBA is making strides towards delivering results for entrepreneurs seeking funding.

She was asked in particular about the boosted guarantees that expired:

“As those guarantees ended, we had the highest quarter of lending ever in SBA history. In the quarter ended Dec. 31, we helped facilitate $11 billion worth of loans. And after that, we were concerned that we would see a fall-off. But, in the past several weeks, we’ve continued to rebound. At the SBA, we are back at 2008 lending levels.”

It’s great to see lending levels back to ‘08 levels. The challenge is meeting that the demand for funding like the IFA saw is out there. We hope Susan Mills can help get franchisees there.

A new study shows that receiving credit continues to be a challenge for aspiring franchisees.

Frandata, in conjunction with the IFA, has conducted a study on franchise financing. They have found that banks will lend about $8.4 billion to new and existing franchisees this year. That’s a big number in and of itself, but the study finds that it is actually $2 billion short of the total amount that franchisees will require this year.

Frandata claim the deficit exists because banks are still suffering from the subprime crisis. The Wall-Street Journal has profiled the survey in a recent story, and all told, the data shows how much franchising contributes to the US economy – and how much more it could if more funding avenues were made available. Frandata state that America’s 35,000 franchises will “create or maintain more than 250,800 jobs and generate $32.5 billion”. The funding shortage means the lack of “8,000 unit transactions” as well “82,000 jobs and $10.7 billion in annual economic output this year” that won’t be created.

$10.7 billion. It’s a staggering amount. Hopefully the government or some third-party can step in to fill this void that the banks have left. Because, as this study shows, all of America loses when franchising is sidelined.

When disaster strikes, franchisees have to pick up the pieces and move on. This is something that business owners in Japan are learning right now sadly. Franchisees in Christchurch had to deal with similar tragedy only a month ago. As natural disasters seems to occur more and more often, it pays for a franchisee to plan for the worst.

Of course, the commissioning editors at Entrepreneur magazine had no clue of the lurking catastrophe in Japan when they assigned journalist Fawn Fitter a story on how franchisees cope with natural disasters, but the story proved tragically prescient. It’s probably not of much solace to anyone in Japan or anyone who’s lost a business due to a natural disaster, but there are lessons for business owners all over the world in this story.

One of the advantages of owning a franchise is, of course, that you have what Entrepreneur call a “safety net”: that is, the support of your corporate team. Jay Hennessy’s Snap Fitness gym was flooded in 2010 and thankfully, the franchise helped him get back to business right away.

“They picked up part of the cost of the clean-up, not with a loan, but with cash to get things done,” he told Entrepreneur. “It was a decision they made on the fly, and I appreciated it.”

The story discusses two other franchisees: one who lost a store to by fire, the other to a hurricane. Both are open now and thriving. There a number of lessons they have for other for franchisees. One it is to prepare for the worst. The other is to trust your corporate franchise team.

If the unforeseen ever happens, it’s important to have a friend. Your franchisor might be the best friend you’ll ever have.

This week, we are bringing you a special report on the franchise industry featuring exclusive interviews with industry representatives.

Click here to download this week’s Franchise Update, or watch in the player below:

Interviewees include Great American Cookie Company franchisee Doc Cohen; Vice President of Franchise Development for Regis Corporation Alan Storry; President of Hot Dish Advertising Dawn Kane; Vice President of Operations for ASBDC Donna Ettenson and President of Sports Clips Clete Brewer. Enjoy!

This week we have news on the IFA’s prediction for the first drop in franchise sales in the last 20 years. That said, it’s not a bad news for the franchise industry, as two groups- minorities and veterans – have been enjoying success of late.

Click here to download this week’s Franchise Update, or watch in the player below:

Franchising has thrived during past recessions and it’s hoped that the government will take action to ease credit market to capital flowing back to prospective franchisees. Picking up on the mantra of change that swept Barack Obama into the White House last November, Maria D’Ambrosio, senior director of inclusion and diversity for Choice Hotels International has emphasized the importance of minority franchise ownership.

Thanks for watching.