Some Background Info:
Since 2009, Boefly, an online marketplace that connects small businesses and lenders, has improved the world of commercial transactions by reshaping the business lending process; BoeFly’s state-of-the-art dynamic technology generates appropriate partnerships based on a franchisor’s preferences and a franchisee’s loan requests, resulting in a quicker and more efficient process and increasing the number of completed transactions overall. In 2014, BoeFly partnered with Fico and Equifax to release bQual, an online service that provides business owners with instant credit scores, financing reports and insights on their business’s creditworthiness and fundability. Together, Boefly’s marketplace and bQual’s information and insights have worked hand-in-hand to raise business lending standards and revolutionize the way small businesses understand the industry.
This January, BoeFly partnered with 1851 Franchise, an online educational resource that speaks directly to the franchise industry, to release what will be known as one of the greatest tools for the industry to-date, The Franchise Finance Index. The Franchise Finance Index is a monthly overview of the franchise lending landscape and is generated using statistical information taken directly from bQual’s database. Mike Rozman, CEO of BoeFly, explained the motivation behind the new Index earlier this year; We’re trying to provide an honest look into what we’re seeing here at BoeFly for the larger market. By providing this aggregated data that only we have access to, we expect to educate those interested in franchise sales and financing alike.
What is the Franchise Finance Index?
The Franchise Finance Index is composed of four quadrants: the average Fico Score, the average FICO SBSS Score, average liquid assets and average retirement savings. The statistics are derived using data from over 9,000 accounts in the bQual database (including Jamba Juice, Smoothie King and Firehouse Subs) to reflect the industry average. The January 2016 Franchise Finance Index revealed an average FICO Score of 748.15, an average Fico SBSS Score of 191.38, average liquid assets of $158,760 and average retirement savings of $188,649.
In addition, the Franchise Finance Index also tracks the top ten active states that produce franchise leads. The January 2016 report revealed Texas as the leading contributor of franchise leads, followed by California, Florida, Arizona, Colorado, Pennsylvania, Virginia, Michigan, South Carolina and Georgia.
The purpose of the Index is to help business owners and lenders understand the characteristics of a good candidate. Access to a panoramic view of the industry allows candidates to determine if they meet industry standards and examine if they are truly ready for franchise ownership; conversely, the same data helps franchisors to distinguish what an A+ profile should look like and make smarter decisions about who they choose to partner with.
For the first time, business owners have access to statistical data that will help determine the likelihood of their business success. Tools and resources such as bQual, Fundability Apps and The Franchise Finance Index allow business owners to view their profile, assess their likelihood of fundability based on the profile and compare themselves to the industry average. Because business owners have access to options that provide them with their capital position and creditability standing sooner, the amount of financially unqualified franchisee candidates will begin to decrease, the costs and time associated with lending will be reduced, the franchisee-to-sale conversion rate will increase and successful franchising will become more attainable.