Franchise Lawyer Blog

Trends Revisited

Credit Crunch:

This topic has been previously discussed by us and is still a hot topic of discussion.

As today’s Orlando Sentinel notes:

“Usually, a downturn increases interest in franchises as people laid off from corporate jobs try opening their own restaurants, convenience stores and child-care centers.

This time, though, the tight credit market has made it difficult for would-be business owners to find financing, something that’s “really wreaking havoc on the sale of franchises,” said Alisa Harrison, a spokeswoman for the International Franchising Association.”

SBA Lending:

We have written previously about franchising and Small Business Administration lending. The subject is touched upon again in the June/July issue of Franchise Times. In a section called “Dollar Signs,” the magazine notes that while SBA lending has increased since the beginning of the year, nevertheless the total for this year (20,997 loans) remains at half of the number approved at the same time a year ago. The IFA is predicting that franchise lending will decline 40 percent this year, which will cost the country 50,000 jobs and $5 billion dollars in economic activity. A recent survey suggests that three-quarters of lenders believe that they will ultimately increase lending as a result of stimulus policies, so a guarded optimism may not be misplaced.

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