A Direct Capital Trend Report: Booming Franchise Business

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Drawing on our in-house expertise, Direct Capital will be chatting with segment managers and sales representatives for enlightening looks at what’s going on in the world of finance. Today, we talk franchise with Franchise Segment Production Manager for National Brands Ryan Driscoll.

The idea that franchises will be a driving force behind the economic and employment recovery in America is not a new one, but it is an idea that is gaining increasing traction in recent months. That echoes the growth Direct Capital is seeing in its franchise financing segment, according to Ryan Driscoll.

He was emphatic that there has been an increase in demand for working capital.* Driscoll said the chief drivers of the demand are in technology and updates for individual franchisee locations.

“We’re seeing a lot of technology upgrades,” Driscoll said.

Those factors add up to a “pretty huge plate” for the franchise segment, which is coming in a more comfortable lending environment for franchisees than in years past. Driscoll singled out Domino’s Pizza as a client who rebounded significantly late in 2010 and is now riding a wave of success, bolstered by an aggressively honest ad campaign and an overhaul of the way they make their pizza.

“In late 2010, they really made a rebound,” Driscoll said, who said the company is “starting to squash a lot of myths” about its ingredients and how it operates.

That this busy season is coming in Quarter One and early Quarter Two is significant because those are boom sales times for franchisees across the segment, according to Driscoll. Traditionally, franchises undertake overhauls or remodeling of their locations in the fall and winter when fewer customers are arriving, making the early request for capital and equipment financing encouraging.

“Summer is when all franchises are going to have higher sales numbers,” he said.

According to Driscoll, Direct Capital has “up to $250 million available to lend” at a time when lending is just beginning to stir after a long period of stagnation in the U.S. Hopefully, that is welcome news for your small business.

So that’s our report from our own little slice of the franchise world. We would love to hear your feedback, as always.

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*Working capital not available in the following states: AK, DE, ND, VT