Franchise Brokers Association BLOG

Statistics show that small business and franchise owners who use Rollovers as Business Startups (ROBS) arrangements to fund their ventures are 63% more likely to succeed.

Why are they so successful? Because they buy their business in cash and don’t tie their credit or other personal assets to the transaction. Because they don’t have to jeopardize their home or pay high interest costs. Because they start out with more capital to spend on hiring the best employees, advertising and equipment, therefore building a tremendous foundation from the get-go.

Since their founding in 2003, Guidant Financial, has emerged as an industry leader in self-directed IRAs and innovative small business financing. Here are several questions they suggest asking of any ROBS provider when using their services or referring a client, and the answers you will receive when asking them:

1. Have you ever had a plan disqualified or paid taxes or penalties on behalf
   of a client?
   We at Guidant have not. Our plans withstand scrutiny.

2. Do you provide in-house 401(k) recordkeeping services?
   We at Guidant do. In fact, we have over 30 individuals dedicated to the “back end.”  Most errors occur after the initial formation of the business.

3. Do you stand behind your program and will you put that in writing?
   We at Guidant provide Plan Protection to our clients. We will stand behind our work, our clients and your referrals, and bear 100% of the cost to do so.

4. Do you have an in-house legal team?
   Not one attorney, one professional or one resource. A team. Our team at Guidant has the largest legal team in this industry working under one roof. [Clients] can work with us knowing that our team of tax professionals and ERISA experts (including a former ERISA Investigator for the US Department of Labor) provide comprehensive support to them as a client.

5. Do you reciprocate referrals?
   At Guidant, we do. Our web properties generate more than 3,000 leads each month. While some companies rely exclusively on you – we work with you to close deals with your candidates quickly and send call-verified, qualified referrals back to those who support us.

6. Does your company have sufficient experience?
   At Guidant, we’ve helped more than 6,000 people in all 50 states invest more than two billion dollars through ROBS, and that amount keeps growing.

7. Is your company the recognized industry leader?
   At Guidant, we’ve been honored by many industry and civic organizations for our leadership, innovative business and philanthropic efforts. We were recognized as a Small Business of the Year by the US Chamber of Commerce, ranked on the prestigious Inc 500 list, and the SBA said our founders were the best in the country.

For more information on Guidant Financial’s services and how they can help you fund a business, contact an FBA member today.

The below is a post from FBA Member, Andy Lamedman.  Andy joined the FBA in June of 2010 and has stood out as a true professional who upholds the integrity of the industry.  Thank you Andy for your insight and for sharing your experience.

Networking Pays… Big Commissions!

I have always believed in and heavily touted the power of networking.  And still do… even more so now as you’re about to find out.  For anyone that has ever wondered what the value of networking can mean to them, please continue reading.

Whether you go to a networking breakfast at 7:00 AM, or attend an evening cocktail mixer that starts at 6:30 PM, you’re investing extra time into your work day.  So why do it?  Here’s why:

A few months ago I attended an evening mixer and met a woman networking her business.  We engaged in the obligatory chatter and exchanging of business cards.  As is my custom, I followed up with a “nice to meet you email”, and my personal offer to learn more about her business in an effort to pass some referrals her way (I always start by giving).  I then put her name on my monthly “drip system” distribution list to begin sending her my newsletters and other e-blasts.

One day, out of the blue, I received a call from her saying; “Hi, remember me?”  Well, of course I do.  She indicated she would like to learn more about what I do, and how I could possibly help her find the business of her dreams. Unfortunately, she hastened to say, that she did not have the requisite finances to invest in such a venture.  However, she did say; she has a friend who might be interested in partnering with her as a financial investor to her “sweat equity” investment.  And so we began the process…

Fast forward now to the close.  We ultimately inked a deal where they are partnered in a Junk King franchise in Los Angeles, CA.  And, I received a commission approaching $30,000 at first blush, with much more to come on the back end based on the structure of the deal.

Junk King had wide open territory in Los Angeles County.  They sell their territories in blocks of 500,000 population sectors.  My clients purchased four-blocks totaling Two Million population.  We also negotiated the Right of First Refusal for the balance of Los Angeles County and the neighboring community Southeast of L.A. County known as the Inland Empire.  As they exercise that right and purchase additional territories, the Franchisor will continue to pay me my broker fee referral commissions (yes, we have this in writing).

Additionally, my networking pal (now client and friend) subsequently referred me to her neighbor who is about to be laid off from corporate America and receive a sizable severance package.  He too, is now looking to secure his future and we are taking him down the path to freedom, et cetera.

So, the moral to my story:  Networking Pays… Big Commissions! I met someone that had interest but no money.  She introduced me to someone with money.  They formed a partnership and closed a deal that paid me a sizable commission, with additional commissions yet to come as they develop their business.  Additionally, she introduced me to yet another lead that has potential to earn me more money yet again.  All of this from someone that I did not pay a nickel for in terms of “lead cost”.  This was a free lead… just from attending a networking event.

Further appreciation for closing this Junk King deal goes out to:

• Dennis Mulgannon, Franchise Development Director / Jung King:  Dennis is the consummate professional and was extremely easy to work with.  He’s efficient and very accommodating to both the client and broker requests.  Simply a joy to do business with.

• Tom Mc Donald, President / IRA Rollover Solutions: Within 45-minutes of the initial introductory call with my clients, Tom outlined his services and fees, took the application and credit card number from my client and was on his way to expediting the filing of  Articles of Incorporation with the State of California.  He also set up a 401(k) plan in the name of the new corporation for the client’s new business, secured a third party administrator for the 401(k) plan, and obtained the Federal Tax I.D. numbers, for both the Corporation as well as the new 401(k) plan.  Additionally, he handled all paperwork related to rollover funds making it easy and seamless for my client to gain access to his funds required to wire transfer to the Franchisor in a timely fashion.  Not only was Tom knowledgeable, efficient and effective, he pays a broker referral fee of $1,500, which is 50% higher than his competitors.

• Eric Riess, Legal Expert Extraordinaire / Greesnfelder, Hemker, & Gale, P.C.: Talk about a Master Class.  Eric provided the one-hour of free legal counsel we offer and within the first 30-minutes alone had fully educated my clients.  He answered their FDD questions, reviewed their Addendums to the FDD that had already been verbally negotiated with the Franchisor, and guided them on how best to structure their Joint Venture Partnership Agreement between the two of them.  

At the end of the day, all parties worked exceptionally well and in concert for the good of the ultimate result… putting a client in business!

Congratulations, Andy!

If you’d like to learn more about working with a franchise broker, click here

Global Broker Training Systems

The FBA is thrilled to have recently started working with an excellent, professional B2B business.  Global Broker Training Systems (GBTS) is a high-end, profitable business opportunity that deals in the industry of business funding.  GBTS has seen incredible need for their services throughout the recent recession as many companies need additional capital to grow and maintain their businesses.  With many large, “traditional” banks and institutions cautious in lending, GBTS brokers were able to help these businesses and earned borrowing clients for life.  GBTS provides preferred lending vendors so the broker focuses on building the relationship with their client and matching them to the best lending product for their needs.  Brokers are able to provide all types of financing; lease financing, working capital loans, debt restructuring, business acquisition financing, accounts receivable loans and much more.

GBTS is the best opportunity for an individual with excellent communication and management skills, who is open to working part- or full-time and is looking for a flexible opportunity (where they can work from home or on the road, meaning they can travel whenever they’d like).  GBTS offers training for their brokers for a small initial training fee and requires no on-going fees or royalties.

Learn more about Global Broker Training Systems by contacting an FBA Member here.

Learn more about becoming a Franchise Broker or FBA Member here.

Fund a Franchise Fast!

By investing retirement funds into a franchise, 92% of Guidant clients fund in 21 days or less.

Thousands of entrepreneurs have discovered that purchasing one’s own business as a legitimate 401(k) investment can lead to less overhead and faster success. In fact, industry experts estimate that more than 10,000 small business start-ups have been capitalized in this way since 2005, and more than half of those entrepreneurs worked with Guidant Financial Group, considered the leader in “Rollovers as Business Start-ups” (ROBS). It appears that what was once viewed as a secondary option is recognized today as a reliable and intelligent way to fund a business.

For the average small-business entrepreneur, capital is virtually non-existent. Even the SBA loan is frustratingly elusive: Between January and June of 2010, there was a 27% drop in SBA loans. For today’s potential franchise owner, using money from their retirement accounts to finance all or a portion of their new business is their only funding option.

When completed by a provider intimately familiar with this type of transaction, franchise purchases can be surprising short. Guidant has streamlined the process to the point where 92% of their clients’ deals close in 21 days or less.  Perhaps this is stating the obvious, but time kills deals. Guidant’s efficiency means that franchisees start their business with little or no debt; franchisors can look forward to a franchise unit positioned for rapid success; and consultants/brokers enjoy more (and faster) financial rewards.

So how does it work? Foundational to this type of transaction it the fact that a 401(k) can legitimately hold both publicly and privately held stock. Using Guidant’s process as an example, the basic steps start when a private corporation is created for the new business.  Next, a 401(k) is created and then their existing retirement funds are rolled into the plan.  Then the new 401(k) makes an investment into the newly formed corporation.  Finally, the corporation, in turn, uses the investment proceeds to acquire a franchise or other small business, and the 401(k) becomes the shareholder.

Besides enabling the new franchise owner to avoid high-interest loan payments, this transaction enables them to grow their 401(k) retirement nest egg while they grow their business. There are additional advantages to this type of transaction. This includes, but is not limited to: the franchisee making a debt-free investment into their business; offering a benefit that is unavailable in small business today though the businesses new 401(k); using their retirement funds as a down payment for a larger loan; and obtaining capital without using their home or credit as collateral.

Because these transactions are fairly complex, working with a small or inexperienced firm can trigger substantial tax problems. Guidant has proven that it understands the importance of properly administering these plans, and it takes its role very seriously. Because of its expertise and reliability, Guidant Financial Group is the only business within this niche industry to have made the Inc. 5000 three years in a row. Not only does its growth demonstrates that more franchise consultants trust Guidant to help their clients fund a franchise, but it also points to an increasing reliance by small business on the ROBS form of non-traditional funding.

By being fully informed about this rich source of untapped capital, you can help put more of your clients into their dream business and help propel yourself into a higher tax bracket!

David Nilssen is the founder of Guidant Financial Group. In 2007, the Small Business Administration (SBA) named Nilssen the National Young Entrepreneur of the Year and the Puget Sound Business Journal named him one of the top 40 businesspeople under 40 years of age. In both 2008 & 2009, Ernst and Young named him a finalist for their coveted Entrepreneur of the Year award.
Visit Guidant Financial Online to learn more about Self Directed IRA, Real Estate IRA, Small Business Financing and SBA Loans.

Without the right resources, connections and knowledge, financing a franchise can seem like an impossibility. Bankers and lending institutions are more stringent in their qualifications than ever before. Many otherwise worthy borrower-candidates have been declined for funding, for numerous reasons.

Macro Business Capital has a solution

Macro Business Capital is a Minneapolis-based 13-year-old financial services company that specializes in providing unsecured business lines of credit, requiring NO COLLATERAL. This funding process has allowed many franchisee candidates, who would not otherwise have qualified for SBA financing, to achieve the needed funding for their franchise.

This type of funding is ideal for any franchise candidate who has a good credit rating, but may lack sufficient liquidity, real estate collateral, income-to-debt ratio, employment tenure, etc. required for traditional bank financing. None of these are required for Macro’s Business Line of Credit (BLOC) program, and funding is available for 100% of any project. Target amounts range up to $150K for an individual, or up to $300K for two partners, such as husband and wife. Macro also offers a 24 hour approval period.

Why put your assets at risk if it isn’t necessary ?

Most banks require real estate collateral to secure the loan for a franchise. Macro’s BLOC program requires no collateral. Requirements are simply a good credit history and a proper corporation entity. Macro also assists in setting up the necessary corporation, if needed.

Some highlights of the Macro Business Capital funding program:

* Funds can be used for any purpose, any industry

* Multiple lender relationships are established

* Lines of credit may be used again and again

*Interest rates are competitive with traditional financing

*Introductory rates as low as zero percent

*Simple application process, limited documentation needed

*24 hour approval process

* All credit reporting is to the business credit file, not to the borrower’s personal file

In times of strict financing requirements, Macro Business Capital’s BLOC program can be the difference in a potential franchisee being approved for funding or being left on the sidelines. They welcome all inquiries from franchisors, franchise consultants, startup franchisee candidates, as well as existing franchisees who wish to expand.

“I want to thank you. I was skeptical that you could get me $100K, let alone in 90 days. But you have proven yourself. I am happy to report that my new business will open next week.” Jerry G. , Bloomington, MN.

“I have worked with Macro Business Capital since the first part of 2010 in referring potential franchise candidates for funding. I have found their service to be very effective, and their guidelines to be more flexible than traditional means such as the SBA loans.”   John Briches, Franchise Consultant, Sarasota, FL.

To contact Macro Business Capital call (800) 980-0790 or email melcooksey@mbcfunds.com or visit www.macrobusinesscapital.com/ssi

If you’re interested in going into business for yourself, starting your own company or investing in a franchise, there is excellent news on the lending front.  The Small Business Lending Fund Act — HR 5297 — is currently being considered by the Senate.  The bill could mean some great things for current and potential entrepreneurs.

This bill, if passed, would increase the maximum amount of both SBA 7(a) and 504 Loans, allow for borrowers with balloons coming due to refinance, and would re-up the guaranty to 90% for 7(a) Loans.  Details of the bill are outlined in the SBA 504 Blog, which organizes the potential changes to the loans as well as  outlines the benefits the bill could reap.

The International Franchise Association is supporting an amendment to the Act which would increase the maximum loan amounts for the SBA 7(a) program to $5 million and for the 504 program to $5.5 million.

From the SBA website:

The 7(a) Loan Program is SBA’s primary program to help start-up and existing small businesses obtain financing when they might not be eligible for business loans through normal lending channels.

The 504 Program provides small businesses requiring “brick and mortar” financing with long-term, fixed-rate financing to acquire major fixed assets for expansion or modernization.

Currently maximum 7(a) Loan Program amount is $2 million, and maximum 504 Program amount is $1.5 million for job creation, $2 million for public policy goal and $4 million for small manufacturers.

For more information on SBA Loans, check out the SBA website here.