Financing Franchisees In-house with End-to-End Digital Lending Automation

Market Problem

What stops many businesses from starting their own franchise business are the expensive franchise fees which can range from $10,000 to $80,000 with a market median well above $30,000. Despite the size of the market opportunity, only about 12% of franchisors offer in-house financing so the franchisees need to deal with third-party lenders instead of working directly with the franchisor. This used to be the only option because running a franchise financing operation in-house required technology and resources only accessible to large-scale traditional lenders. This is no longer the case with TurnKey Lender’s technology for end-to-end franchise financing automation.  

Market Opportunity

Many franchisees require financing to start and ramp up their business. Getting an external business loan takes long time, while embedded financing can drastically shorten the time to market as well as provide the franchisor with a higher customer lifetime value.  

Whether your business is offering franchises for fast-food restaurants, gas stations, convenience stores, full-service restaurants, bars, hotels, real estate agencies, fitness centers, beauty salons or any other type of business, many potential franchisees need easily accessible and affordable financing. Traditionally, franchisees turn for financing assistance from the franchisor. And there are several ways for franchisors to assist franchisees in obtaining financing. 

• Matching franchisees with a lending facilitator  
• Partnering with lenders to resell their services to franchisees 
• Guaranteeing loans for franchisees 
• Providing financing in-house 

All the options, asides providing financing in-house, mean that your business is creating a client for someone else instead of building better relations with the franchisee yourself and growing your own business profits. This makes sense in a world before digital transformation, where extending credit in-house meant high overhead and additional work for your employees. But with the current offering of embedded finance technology, offering in-house credit can be as easy as running an e-commerce store.  

Embedded franchise financing can be structured in several ways depending on the preferred business model: 

• Regular term loans with interest or without  

• Equipment leasing as equipment often makes up 25-75% of a franchise's total start-up costs 
• Credit lines with access to a limited amount of funds allocated for specific franchise needs  
• Non-amortizing loans where principal repayment is postponed till the end or balloon loans. 

If your business utilizes intelligent lending automation software, offering franchise financing in-house allows your business to grow the customer lifetime value, ensure higher level of certainty in the franchise success, and helps you serve the franchisees better. 

“With TurnKey Lender, creditors can employ alternative as well as traditional scoring approaches drawn from an array of data sources to achieve a 360 view of borrowers.” 

Elena Ionenko

COO and Co-founder of TurnKey Lender 

Software for Franchise Financing

Lending automation used to be a privilege only accessible to large-scale traditional creditors who could afford the underwriting and loan management overhead as well as AML & KYC compliance and development of the software. With Unified Lending Management software by TurnKey Lender, any franchise provider can become an embedded lender for their clients and extend fair credit thanks to AI-driven risk scoring and SME borrower evaluation. 

Key Benefits 

• End-to-end lending processes automation, from application processing to origination, underwriting, loan management, collection, and reporting. 
• Franchise applications are received and processed automatically online in real time replacing manual submission and analysis. 
• Time-to-funding can be reduced to same-day approval thanks to AI-driven automation. 
• Run multi-country/multi-language operations on the same platform. 
• Automatic possessing of the revenue information which can be used for risk assessment and underwriting. 
• Any franchisee can apply for a term loan or credit line and the credit decision rules can be configured around the scoring parameters relevant to the business. 

“Since our founding, and especially during the current healthcare crisis, TurnKey Lender has been seen as a leading player in embedded lending. We provide the only SaaS platform that automates all digital lending operations — and all digital lending decisions — at every stage of every loan’s life cycle.”

Dmitry Voronenko

CEO and Co-founder of TurnKey Lender