How risky does your franchise system look to lenders evaluating your business? And how does it compare to other franchise models?
A new tool can help lenders differentiate credit risk across franchise brands.
Franchise information and intelligence specialist, FRANdata, has released a proprietary scoring model to evaluate 13 credit risk categories of a franchise brand.
The results deliver a FUND score to qualifying brands. This is a single cumulative score that offers lenders the ability to measure franchise system credit risk using a common rating model.
Senior franchise lenders from seven different providers were recently shown the Franchise Underwriting (FUND™) Report during a full day Franchise Lending Summit.
Simon Ovenden, head of franchise business banking at the Bank of Queensland, said “The Bank of QLD looks for brand registrations on the Franchise Registry as a minimum standard for those brands that are serious about access to finance for their franchisees.
"Additional tools such as the Franchise Underwriting (FUND) Report help us understand brand risk which provides a more complete picture to assist us with the development of potential franchisee funding programs.
"Brands that invest in these activities are indicating that they understand the need to better inform and build long term relationships with financiers to underpin their growth aspirations. ”
FRANdata Australia CEO Darryn McAuliffe said "The lending community continues to embrace the increasing availability of fact based information such as the FUND Report on the Australian franchise sector. Making a FUND Report available to lenders is a simple and cost effective action Australian brands can take to promote improved finance access for their franchisees."
Completion of the FUND™ Report is only available to brands that have satisfied the requirements of The Australian Franchise Registry™.
Registration and the publicly accessible search function can be accessed online through www.thefranchiseregistry.com.au