VooDoo BBQ & Grill, a fast-growing system of Louisiana-themed barbecue restaurants, was recently added to the U.S. Small Business Administration's Franchise Registry, a designation that broadens franchise candidates' access to loans to launch their businesses.
FRANdata, the franchise information firm that administers the registry, gave VooDoo the news Oct. 17. The company had gone through an extensive approval process that lasted four months, but CEO Tony Avila said it was worth the effort to clear obstacles to financing for worthy entrepreneurs interested in VooDoo BBQ.
"In our first few years after we started in 2002, our franchise owners tended to be pretty well financed, and it was a lot easier to secure a loan, so it wasn't that big an issue for us," Avila said. "But since 2008, loans have been so hard to secure, we realized we needed to give more people who want to open VooDoo locations an easier path to the financing they need."
The SBA created the Franchise Registry in 1998, to streamline the process banks use to determine franchisees' eligibility for SBA loans. When the agency approves a franchise system for inclusion, it agrees to guarantee 75 to 85 percent of any loan to franchise candidates, reducing the risk to banks and increasing the likelihood of approval.
Before approving franchisors for inclusion, the agency must sign off on their disclosure documents to ensure they meet SBA standards for size and franchise owner independence. The review allows banks to skip several steps in the approval process, saving them time and energy. The registry includes about 1,600 franchise systems, including food franchising giants such as A&W, Denny's, Pizza Hut and Haagen-Dazs.
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