Our client wanted to open their second Golden Corral franchise location in Santa Maria, California. They found a great location – a former furniture superstore that they wanted to convert. They were existing Golden Corral operators in Illinois and wanted the most efficient way to start their second location.
However, their current bank would not follow them to the West Coast with funding. They needed a lender to travel around the country with them because opportunities can arise in different geographical areas. Banks are usually not designed to grant that type of lending.
A Franchise Funding Solution That Crosses State Lines
We were able to finance them through our hedge fund, in which they only had to put 20% down on this new development with a fixed rate of 7.83% for seven or 10 years. The first six months were interest-only.
The great part about this is, this hedge fund does not control funds in a construction escrow account. They give you the full amount for your construction project in your business checking account and you control it! That is huge for anyone who has ever done a construction project and has had to wait for their money to pay all of the contractors until funds are approved. It is not fun and it is so much easier to have the cash in your account to pay everyone when you need to!
Gaining Tenant Improvement Reimbursements
On another note, all of the Tenant Improvement reimbursements from the landlord are going back to our client rather than going to the lender as a principal reduction. This is what most banks or SBA lenders will require.
Our client now has the peace-of-mind that they can expand their Golden Corral franchise locations throughout the country and take advantage of opportunities without worrying about where the money is going to come from! That is huge!