In this episode, Erik is joined by Sherri Sieber, president of FranFund, to dive deep into the pitfalls and must-knows for emerging franchisorsโand the critical importance of funding, accurate FDDs, and realistic projections.
๐ Key Takeaways:
๐ฉ Red flags when franchisees are only allowed to call 3 out of 20 franchisees.
๐ฐ Why underfunded franchisees are a risk to your brand's survival.
๐ The importance of Item 7 in the FDDโand how lowballing can backfire.
๐ง What lenders really look at when evaluating a franchise brand.
๐งพ Item 20 explained: why losing franchise units hurts more than you think.
๐๏ธ The return of the SBA Franchise Directory (and why it matters).
๐ The Coleman Report: the "credit report" for franchise loan history.
๐๏ธ Real estate delays and overspending on flagship locations = long-term pain.
๐
โโ๏ธ Why saying "no" to an unqualified candidate is a gift, not a failure.
๐ฃ Resources Mentioned:
โ
Join the free Franchise Secrets Facebook Group โ https://FranchiseSecrets.com/facebook
โ
Learn about the Franchisor Mastermind โ https://ScalableFranchise.com
โฑ๏ธ Timestamps:
00:00 โ Red flag: Only allowing 3 franchisee references
02:00 โ The danger of poorly capitalized emerging brands
06:00 โ Underqualified buyers & the franchise fee trap
10:00 โ Visualizing burn rate and the path to break even
13:00 โ Why an inaccurate Item 7 can ruin lender trust
20:00 โ The power of Item 20 and why lost units matter
23:30 โ The Coleman Report: Franchise credit score explained
28:00 โ SBA lending changes coming June 1st
37:00 โ Costly buildout mistakes by franchisees
45:00 โ Real estate scarcity cripples scaling
50:00 โ When FranFund says "no," it's for your brand's good
๐ฌ Final Thoughts:
If you're an emerging franchisorโor thinking about becoming oneโthis episode is a must-listen. Your first 10โ20 franchisees define your brand's story, reputation, and lender viability. Don't build a brand on hype. Build it on solid systems, funding, and trust.
๐ Like, Subscribe & Share if you found value.
๐ง Follow the Franchise Secrets Podcast for more expert conversations!
Connect with Sherri and FranFund here:
Website: https://www.franfund.com/
Linkedin: https://www.linkedin.com/in/sherriseiber/
Connect with Erik Van Horn:
๐ Website - https://franchisesecrets.com/
๐ท Instagram - https://www.instagram.com/erikvanhorn/
๐ Facebook - https://www.facebook.com/erik.v.horn/
๐ผ LinkedIn - https://www.linkedin.com/in/evanhorn/
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