Franchisors size up county

As franchisors appear to be renewing their efforts to plant locations in wealthy Fairfield County, the U.S. Small Business Administration and the state continued their efforts to free up financing for entrepreneurs looking to acquire territories.

Earlier this year, New Hampshire-based Margaritas Mexican and Florida-based Naples Tomato Restaurant both announced plans to expand into Fairfield County with franchise locations here, and opportunities appeared to increase on websites that list such opportunities.

At the same time, local banks reported that they are attempting to land SBA backing for franchise loans in a bid to approve more loans.

Tom Radomski, vice president of franchise development for Portsmouth, N.H.-based Margaritas Mexican, said that he does not anticipate the tighter credit markets limiting his company”™s expansion in Fairfield County, where it is planning at least two of its Mexican concept restaurants.

“Credit is an issue,” Radomski said, “but given that we are doing restaurant conversions rather than new construction, the entry cost is much lower.”

In early February, Radomski attended the International Franchise Association annual convention in San Antonio, Texas, and said he was encouraged by what he heard from Karen Mills, administrator of the SBA.

“Mills ”¦ was saying they are very, very concerned about getting credit eased up and flowing again for the average businessman, because they know it”™s the average businessman who leads you out of the recession,” Radomski said.

 


The same efforts are occurring at the state level, where both Gov. M. Jodi Rell and state Senate President Donald Williams Jr. want to create a lending backstop to assist small businesses.

 

“Small business owners know what banks require in order to be able to get a loan,” said Donna Wertenback, CEO of the Community Economic Development Fund. “They don”™t have the cash flow. They don”™t have the collateral anymore. They know they”™re not bankable. So ”¦ they”™re turning elsewhere, and it”™s the nontraditional small business lenders that are absolutely swamped. And while we are not in this position, most of them are very close to out of capital.”

Some franchisors with deep pockets are attempting to free up capital within their own system. Edible Arrangements International Inc., which sells decorative centerpieces featuring fruit and chocolate, has raised $5 million for a “venture fund” to help its partners purchase equipment and hopes to double the fund”™s size, according to Entrepreneur Magazine.

The Hamden-based company cracked the top 50 franchisors as ranked by Entrepreneur in January, a list again topped by Milford-based Subway followed by McDonald”™s and 7-Eleven Inc.

Kansas City, Mo.-based H&R Block cracked the top 10 and took home Entrepreneur honors as the top franchise as ranked by low startup costs ”“ at between $26,000 and $84,000.

Six of the top 10 low-cost franchisors were commercial cleaning services, led by Jani-King; and similarly cleaners also swept up six of the top 10 slots among fastest-growing franchises, led by Jan-Pro Franchising International Inc. The top new franchise, no surprise, was also a cleaning service ”“ Stratus Building Solutions. But if there was a trend among new franchisors, it was in-home help for the elderly, with Senior Helpers and the Senior”™s Choice Inc. both on the list.