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Some Franchisors Raise Their Investment Criteria

Are you an entrepreneur keen to buy a franchise? If so, pay attention. Some franchises are tightening their standards for loaning money.

Today’s Wall Street Journal reports on the growing challenges for entrepreneurs looking to receive funding for buying a franchise. Some franchisors are coming up with new criteria for their franchisees. Popeye’s, for instance, have decided that every new franchisee must already own a restaurant somewhere else.

"We're looking for those that have experience…sweating about payroll and paying taxes every month," Gregory Vojnovic, Vice President of Development at AFC Enterprises, told the WSJ. Popeyes says the new policy has resulted in higher sales for their businesses.

It is not only experience that is in demand. In the eyes of franchisors, money is more valuable than ever. The story also mentions franchisors like Firehouse Subs, who require a 30% down payment –somewhere between $80,000 – 90,000 – from new franchisees.

All in all, this is further proof that franchisors are seeking a higher-quality franchisee in this difficult economy. That said, capital and the experience are outstanding assets to possess for anyone seeking to purchase a franchise. Higher value is being placed on these two things now. Prospective franchisees should just take note.

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