Finance presentation

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Finance presentation

  1. 1. Financing Alternatives for International Franchising Martin Francis Senior Manager Global & Corporate Franchising HSBC Bank Nathalie Dubiez Head of Franchising HSBC France
  2. 2. HSBC Group <ul><li>Committed to international business with 10k offices in 83 countries and territories including commercial banking in 55+ countries </li></ul><ul><li>Developing franchise finance internationally </li></ul>
  3. 3. HSBC Group <ul><li>Dedicated franchise specialists </li></ul><ul><li>Franchise profiles </li></ul><ul><li>Local introductions </li></ul><ul><li>International co-ordination from UK with 20+ years’ experience </li></ul><ul><li>International banking services, e.g. centres to facilitate account-opening, cash management </li></ul>
  4. 4. Financing of Franchising <ul><li>How banks view franchising </li></ul><ul><li>Franchising into a country - how banks can help </li></ul><ul><li>When to raise financing with bank </li></ul><ul><li>Options for franchise finance overseas </li></ul><ul><li>How franchisors can help their franchisees </li></ul><ul><li>Summary </li></ul>
  5. 5. How banks view franchising <ul><li>Improved risk/return compared with equivalent non-franchise operations </li></ul><ul><ul><li>lower failure rate </li></ul></ul><ul><ul><li>proven market for goods/services </li></ul></ul><ul><ul><li>tried and tested systems </li></ul></ul><ul><ul><li>ongoing support and training </li></ul></ul><ul><li>Wide range of industries in a significant and growing business segment </li></ul>
  6. 6. How banks view franchising <ul><li>Opportunity to develop relationship with </li></ul><ul><ul><li>franchisor </li></ul></ul><ul><ul><li>franchisor’s overseas operations/partners </li></ul></ul><ul><ul><li>sub-franchisees </li></ul></ul><ul><li>Major banks have franchise specialists </li></ul>
  7. 7. How banks can help <ul><li>Franchise Specialists - franchise unit </li></ul><ul><li>Maintains relationships with: </li></ul><ul><ul><li>franchisors, franchise professionals, franchise industry association, e.g. British Franchise Association, whose awards HSBC sponsors </li></ul></ul><ul><li>Handles PR, marketing, exhibitions, seminars, training, market intelligence </li></ul>
  8. 8. How banks can help <ul><li>Franchise Specialists - franchise unit </li></ul><ul><li>Guidance about franchising - website/guides </li></ul><ul><li>Tailored packages for franchisees with lending up to 70% of start-up/working capital needs for established names </li></ul><ul><li>Internationally-oriented banks can assist franchisors taking concept overseas </li></ul>
  9. 9. When to raise financing with bank <ul><li>Consult bank at early stage </li></ul><ul><li>Bank will want to assess franchise viability </li></ul><ul><li>Importance of professional advice </li></ul><ul><li>Pilot operation seen as vital to prove concept in a new country, however well established overseas </li></ul>
  10. 10. Options for franchise finance overseas <ul><li>Bank will consider: </li></ul><ul><li>Franchisor’s business concept : </li></ul><ul><ul><li>local customer proposition/financial model </li></ul></ul><ul><li>Franchisor’s international strategy </li></ul><ul><li>Franchisor’s track record overseas </li></ul><ul><li>Resources available - management and financial </li></ul>
  11. 11. Options for franchise finance overseas <ul><li>Bank will consider structure: </li></ul><ul><li>direct </li></ul><ul><li>JV </li></ul><ul><li>area developer </li></ul><ul><li>master franchise </li></ul>
  12. 12. Options for franchise finance overseas <ul><li>Master franchisee </li></ul><ul><li>Equity/debt split </li></ul><ul><li>Venture capital/equity finance </li></ul><ul><ul><li>Business Angels/Regional Development Agencies </li></ul></ul><ul><li>Full range of business lending products </li></ul>
  13. 13. Options for franchise finance overseas <ul><li>Franchisees </li></ul><ul><li>Full range of business lending products </li></ul><ul><li>Franchise-specific arrangements efficient </li></ul><ul><li>50%-70% of start-up costs/working capital </li></ul><ul><li>Costs - interest and fees take into account the risk evaluation (including stake/security) </li></ul>
  14. 14. Options for franchise finance overseas <ul><li>Franchisees </li></ul><ul><li>Loan </li></ul><ul><ul><li>term tied in with franchise agreement </li></ul></ul><ul><ul><li>flexible capital repayments possible </li></ul></ul><ul><li>Working capital facility </li></ul><ul><li>Factoring/Leasing/Vehicle finance </li></ul><ul><li>Money transmission </li></ul><ul><li>Security/collateral </li></ul><ul><ul><li>support from Govt bodies e.g. SFLG/SOFARIS </li></ul></ul>
  15. 15. How you can help your franchisees <ul><li>What do banks look for from franchisors? </li></ul><ul><li>Franchisor’s financial information and strategy/business plan </li></ul><ul><li>Franchisee selection criteria/training/support </li></ul><ul><li>Existing franchisees’ performance </li></ul><ul><li>Terms of franchise agreement </li></ul><ul><ul><li>upfront and ongoing fees/performance conditions/term </li></ul></ul>
  16. 16. How you can help your franchisees <ul><li>What do banks look for from franchisees? </li></ul><ul><li>Background to franchisee </li></ul><ul><li>Business plan - how will franchise succeed in local environment? </li></ul><ul><li>Franchisee’s ‘survival budget’, including a breakeven analysis within realistic profit and cash flow projections </li></ul><ul><li>Security/collateral </li></ul>
  17. 17. How you can help your franchisees <ul><li>Other considerations </li></ul><ul><li>Language </li></ul><ul><li>Ways of doing business </li></ul><ul><li>Legal differences </li></ul><ul><li>Real estate issues </li></ul><ul><li>Staffing </li></ul><ul><li>Supply chain </li></ul>
  18. 18. Summary <ul><li>Franchising is a key part of commercial activity in many countries </li></ul><ul><li>Good market for banks to source new business </li></ul><ul><li>Talk to the banks at an early stage and help bank to understand how your concept will operate </li></ul>
  19. 19.   Martin Francis, Senior Manager Global & Corporate Franchising HSBC Bank plc, Level 32 London E14 5HQ +44 (0) 207 991 0792 [email_address]   Nathalie Dubiez, Responsable Marché de la Franchise HSBC France, 75419 PARIS cedex 08 Tel: + 33 (0)1 40 70 26 09 Email: nathalie.dubiez@hsbc.fr

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