Marrying Franchisees With Investors
kcavella subscriber Posts: 1
edited June 2006 in Elevator Pitches
Hello, I am a finance manager for Dunkin` Brands (www.dunkinbrands.com). I am looking for investors who want to fund existing franchisees as they expand into new markets. I have very experienced franchisees who are excellent operators and our franchising teams want them to expand into new markets such as Nashville or Atlanta. Problem is, they don`t have the financial connections to obtain funding and traditional commercial lenders are reluctant to go into new markets. So, I am trying to marry these existing franchisees with investors to foster expansion.
Does anyone know of any investors who might be interested in this opportunity?
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for example, is there any pattern or historical info you have about the kinds of people who`ve invested in the past? armed with that information, we may be able to draw some people into the dialogue.
thanks for posting at StartupNation.com!
The more financially sophisticated franchisees have found investors who inject liquidity in return for, say, a 30% cut of the corporation.
I`m picturing a mezzanine investor. The banks typically are conservative in these new markets and lend 70%, the existing franchisee usually has 10%...if I could find a mezz investor who wants to put in 20% it would allow some of these experienced operators to expand.
would it involve a bunch of smaller individual deals or a larger one-off type of deal? can you give me a dollar range? just so i can confirm in my mind the investor candidates?
Scenario 1: Existing franchisee in New England. We sell him 27 existing stores in New York for $27M. He finds an investor who injects $6.5M and gets a 30% share of the new corporation. Commercial lender finances the remainder.
Scenario 2: Existing franchisee in upstate New York. We sell him a Store Development Agreement for 31 (new) stores in the Carolinas. He finds an investor who puts $3M liquid and $6M equity into the deal and gets 55% of the ownership of the new corporation. Commercial lender finances the remander.
Scenario 3: Existing franchisee in New England. We sell him a Store Development Agreement for 5 (new) stores in Atlanta. We require the franchisee to have $750K liquidity to enter the agreement; he has $250K. Need an investor to inject $500K.