From the pages of Restaurant Franchising
Years of Lending to the Franchise Community

“As the economy begins to show signs of improvement, we remain optimistic that 2012 will be a better year for franchisees in terms of profitability and access to capital,” says Tom Schuldt, president of First Franchise Capital Corporation (FFCC, formerly Irwin Franchise Finance), a lending company dedicated to the franchised restaurant sector.

After the downturn in the economy, operators put capital-intensive projects on hold. As consumers curtailed spending, the related slowdown in sales coupled with increased commodity prices placed pressure on profit margins. Other factors, including an anticipated rise in healthcare costs and a tightening in the capital markets, caused many franchisees to adopt the prudent business strategy of reducing leverage and preserving cash.

Over the past several quarters, franchisees have seen enough of an uptick in the economy to warrant taking on the debt necessary to invest in improvements and expansion.

There is a good deal of interest in projects such as re-imaging and store renovations. “These types of initiatives were put on hold because the franchisees knew they weren’t going to see the bump in sales associated with the capital improvement,” Schuldt says. “Today many owners feel these improvements will offer the returns necessary to justify the expense.”

FFCC is responding to a growing volume of calls about refinancing. With rates at historic lows, franchisees are weighing costs associated with a refinance, such as closing costs and prepayment penalties, compared with the benefits of a lower interest rate and potentially longer amortization period. “The reduction in monthly debt service can make a significant contribution to the bottom line,” Schuldt says.

Over the past several quarters, franchisees have seen enough of an uptick in the economy to warrant taking on the debt necessary to invest in improvements and expansion.

FFCC provides loans to the franchised restaurant industry to finance real estate, build or remodel stores, acquire existing restaurants, refinance higher-rate debt, and restructure ownership. FFCC works primarily with experienced owner/operators with three or more stores and offers loans ranging from $250,000 to $15 million. “Working with a multiunit operator provides a great deal of insight into the franchisee’s operating capabilities. Multiple stores help spread the risk across the franchisee’s operation,” Schuldt says.

Franchisees work with a team of experienced FFCC associates who tailor custom solutions for their clients. An account manager and marketing vice president partner to structure the transaction and work with the borrower throughout the loan process.

The credit team at FFCC is one of the most senior and experienced in the industry, averaging fifteen-plus years of franchised restaurant underwriting experience. “Knowing the industry from a credit perspective as our underwriters do and having an experienced closing team that understands the nuances of franchise lending is critical in providing the best loan experience for our customers,” Schuldt says. “This approach also facilitates timely and efficient loan processing.”

Working with a lender who knows the business makes good sense. “While a traditional lender may look at the transaction from a collateral perspective, we look at the business from a cash flow perspective,” Schuldt says. “This approach generally results in higher loan proceeds with more favorable terms.”

FFCC focuses on providing its clients a high level of service. “We contact existing clients and prospects on a quarterly basis,” Schuldt says. “We want to keep our name top-of-mind. Our goal is to build long-term relationships to meet all of our clients’ financing needs.”

FFCC is backed by a parent company, First Financial Bank, with the eighth oldest national bank charter in the country and 85 consecutive quarters of profitability. “We are in it for the long haul. We strive to be ‘lender of choice’ for franchisees,” Schuldt says.

For more information about First Franchise Capital, visit