canadian franchise association law day...introduction of panellists 4 the state of the economy &...
TRANSCRIPT
CanadianFranchiseAssociationLawDay
March3,2009
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Overview▪ IntroductionofPanellists▪ TheStateoftheEconomy&Franchising▪WhenisFinancingTypicallyRequired?▪ HowcanaFranchisorImproveaFranchisee’sSuccessinObtainingFinancing?▪ SourcesofFinancing▪MethodsofFacilitatingLoansandOtherBestPractices▪ KeyDocumentstoFacilitatetheLoanProcess
▪ DealingwithProblematicScenarios
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IntroductionofPanellists
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TheStateoftheEconomy&Franchising UnitedStates▪ Economy▪ Franchising–IFAEconomicOutlook‐2009
Canada▪ Economy▪ Franchising–CFAMembershipSurvey‐2009
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WhenisFinancingTypicallyRequired?
Franchisor
Franchisee
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HowcanaFranchisorImproveaFranchisee’sSuccessinObtainingFinancing?
Consider: SourcesofFinancing MethodsofFacilitatingLoansandOtherBestPractices
KeyDocumentstoFacilitatetheLoanProcess
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SourcesofFinancing
Traditional FinancialInstitutions CanadaSmallBusinessFinancingProgram(CSBF)
Non‐Traditional Franchisor FamilyandFriends BusinessDevelopmentBankofCanada&BusinessCoaching OtherAlternativeLenders?
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MethodsofFacilitatingLoansandOtherBestPractices
UnderstandingtheLender’sPriorities▪ CashFlowandRiskAnalysis▪ Security
DisclosureDocumentReviewandUpgrade EnsureAccuracyandConsistency CriteriaforChoosingFranchiseesandSiteSelectionCriteria EnsureAccuracyofAnnualOperatingCostsandEarnings
Projections
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MethodsofFacilitatingLoansandOtherBestPracticescont...
WorkingCapitalRequirements AllocateInternalResourcesorOutsourceLender
RelationshipswithBrokers FranchisorDueDiligencetoPre‐qualifyProspectsEarly
andRegularly DealingwithMulti‐UnitFranchisees
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MethodsofFacilitatingLoansandOtherBestPractices
GenerateListofPreferredLendersandMeetwithThem PrepareOperationalPro‐formaStatements ReviewofFranchisor’sInternalSystems
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KeyDocumentstoFacilitatetheLoanProcess
ConsentFormfromFranchisee Franchisee’sPersonalGuarantee CertificateofInsurance EmploymentHistory PersonalCreditHistory
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KeyDocumentstoFacilitatetheLoanProcess
BusinessPlan[SeeAppendixformoredetails] OtherDocuments
GeneralSecurityAgreement SubordinationAgreement RegistrationofNoticeofSubordination Franchise(Comfort)Letter
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DealingwithProblematicScenarios
Pre‐defaultFranchisorActionforProblemLocations FranchiseeLoanDefault:Bank/FranchisorCooperation Franchisee’sFAisTerminated FranchiseeInsolvent,BankruptorVoluntaryAssignedinto
Bankruptcy....
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DealingwithProblematicScenarios
FactorsAffectingFranchisorDecision&Action(Possession,Operation,PayBank,DoNothing)
FranchisorHasAssumedControloftheBusiness ResaleofBusiness
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JosephAdler [email protected] [email protected] 416‐695‐2896www.hofferadler.com www.cfa.ca
RossBain [email protected] [email protected]‐568‐0000 (416)980‐3225www.primerestaurants.com www.cibc.com
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Financial Profit&lossandcashflowforecasts Openingbalancesheet Costofbusinesswithbreakdownbyasset Howbusinesswillbecapitalized(ownerequity,landlordTI,bankloan)
Howloanwillbesecuredandrepaid
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Non‐Financial Howandwhythesitewaschosen Howthefranchiseeisqualifiedtorunthebusiness Backgroundonfranchisoranditstrackrecord
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