According to CNBC, the franchising industry was set to grow 1.7% in 2016, bringing the total number of U.S. franchises to over 790,000. But with that said, the global franchising industry has seen its fair share of successes and failures. Once businesses have established themselves domestically, they look to expand abroad, and often times, they choose to franchise as their next step. As a whole, the franchising model has been documented as a simple strategy because it involves setting up the right infrastructure, streamlining operations and replicating the same sales process that has worked in the past. However, taking the global franchising route can be complicated if the business isn’t fully prepared with a sound business model and exporting plan. Global markets contain different types of demands, needs, wants, costs, etc., and all of this needs to be taken into consideration.
One aspect of the global franchising model that is often overlooked is the trade financing piece . And that’s where EXIM Bank can come in. Whether it’s the franchisor, franchisee or supplier, any type of player in the franchising world can get the financing support they need from EXIM Bank. More specifically, the franchise players find themselves needing support to help finance their equipment or services exported abroad. Below is an example of popular fast-food chains that were supported by EXIM Bank:
In 2008, Restaurant Associates, Ltd., of Kingston, Jamaica, bought U.S. franchise rights and restaurant equipment for 10 new Burger King and Popeye’s franchise restaurants in Trinidad and Tobago in a deal that was backed by an EXIM Bank-insured $992,240 loan from SunTrust Banks, Inc., of Atlanta.
The EXIM Bank repetitive-shipment, medium-term insurance policy helped Restaurant Associates buy the franchise rights and equipment from several U.S. suppliers. The Executive Director of Restaurant Associations, Frank Ventura, said “We will be growing our business by 15 percent with the help of this EXIM Bank-supported transaction”. In essence, working with EXIM helped to secure the deal because the U.S. suppliers felt at ease doing business with a foreign buyer, knowing that the deal was backed by EXIM Bank.
Learn How EXIM Bank Can Help Your Franchising Business
Whether it’s the fast-food franchising business, product franchising business or manufacturing franchising business, EXIM can support your financing needs through working capital loan guarantees or export credit insurance. To learn more about what EXIM offers, request a consultation here to speak to your local EXIM Bank rep.