Shirley Kefgen: How Can I Finance a Franchise?

Adam: Welcome to another edition of the franchise consultant podcast. I’m here with Shirley Kefgen with Fran fun, so excited to see to visit with you today Shirley.

Shirley: Yeah. Thanks so much for having me here. Adam. I always love talking about franchising and funding. So I appreciate the opportunity to be here.

Adam: So you’ve been in franchising for a long time, haven’t you?

Shirley: Actually, on May 1, just a few days from now, I will be celebrating my 20th anniversary in franchising.

Adam: Wow. Wow. And walk me through and walk our listeners through what kind of experience you have in the franchising industry, and whatever. Yeah,

Shirley: So about 20 years ago now, I was living in Lansing, Michigan, that’s my hometown. And there is a franchise headquartered there called to manhandle truck. It’s a moving company. And I happen to sort of fall into franchising through beginning my work as an employee to manage profit, their corporate office. Within just a couple of months of joining their team, they put me into a franchise sales and development role. And while at the time that wasn’t necessarily where I saw myself long term, I could not be more grateful that that’s where I’ve landed. Because I think without them putting me in that role, I would not have had the opportunity to learn how much I do love this world. So I spent about eight years managing tracking franchise sales and development. They were very big into just education. And so I was able to earn my certified franchise executive designation through the international franchise Association at my time at 200 and top, but like a lot of people from Michigan, I did finally get sick of the snow. So in 2008, I made my way out to Arizona in the Phoenix area. And when I got here, I started working for a senior care franchise again in franchise sales and development. But with that being a system, our franchisees would hire caregivers to then go into the homes of seniors and kind of help them with daily living. So I was with that company for about five years. And through my experience, they’re got to know Fran’s fund as an organization because probably 85 to 90% of the folks that I helped to join that franchise system used Fran funds assistance on the funding side. So when it was time for me to sort of making a move, I reached out to the owners of Fran fund and you know, just said I enjoyed getting to know you and I would love to kind of dip my toe in the water on the funding side. Do you think you have any room for me or availability to talk it through and so you know, a little over seven years later, here we are, it’s been a great experience with brands.

Adam: That’s great. And if for our listeners that aren’t familiar with Fred fun, what does Fred fund do?

Shirley: So as I already indicated, We specialize in franchise funding options. So our number one priority is to help folks to identify solid funding strategies to help them meet that old business ownership. And then once they’ve selected the franchise, that’s the right fit for them. Our next step is to help them execute on new strategies. We primarily focus on two areas. One of the things that we do is facilitate the SBA loan process. So while we are not a bank or a direct lending institution, my team does have about a 99% success rate in terms of maintaining a love for folks. So they’ve provided a pre-approval letter to and then on the other side of the house, we facilitate an IRS program called the rollover for business startup. Or you’ll see the acronym Rob’s our ROBS. Thank the IRS for that limb. But with that program on scopes to do is access money that they’ve saved maybe in a 401k or an IRA that they rolled retired dollars into. And that program allows you to invest that money directly into your own small business without having to pay income taxes or opportunities for touching on the spot. So we spend our time helping folks navigate the waters of both of those programs.

Adam: That’s great. And so for our listeners that don’t understand this, can someone take their money from a 401k that investing that 401k in the stock market, which by the way these days isn’t particularly safe or secure, stable, and they can they invest in themselves and invest in a franchise business without penalty?

Shirley: They can, yes. And you know, a lot of financial advisors are not aware of this program. So sometimes, you know, when folks go to get some third party feedback, they may hear Hey, that’s not possible. That’s not how it works. But with this Rob’s program, this rollover for business startup, I would, I would say that it’s similar to having an IRA, maybe with $100,000, that’s been invested in Sony and Best Buy in Home Depot stop. With this strategy, you can take that hundred thousand dollars off into the market. And instead, through a 401k plan, invest the money directly into the stock of your own small business. And, you know, what you’re essentially doing there is you’re saying, hey, I’ve done my homework, I’ve done my research, I think that I have found a business that I can enjoy some success in. And if I were to take some of this money and invested into my own business, I believe that I’m going to get a return that is just as good as if not better than what the market had done over the same period.

Adam: You’re investing in yourself.

Shirley: That’s exactly yeah. Exactly what this gives you the ability to do.

Adam: That’s, that’s cool. I’m going to switch gears for a second Shirley, I’ve known you for a while now. And I think you have one of the most interesting stories I’ve ever heard, you could share that you know which one I’m talking about. All right.

Shirley: So, as I mentioned earlier, I live in Tempe, Arizona, in the Phoenix area. And you know, we’re a dessert, that’s kind of our landscape. And as some of you may or may not be aware, one of our prominent critters in the desert is a scorpion. So a couple of years ago, I was getting ready to hop on a plane and attend a conference. I was supposed to be meeting Adam and some colleagues at a conference. And as I was brushing my teeth, I was in my bathroom. I stepped down and thought that I put a sharted blaster and I fucking couldn’t figure out what I possibly could have stepped on. And it turns out that it was a scorpion. So you know, I thought, Hey, no big deal, we’ll just go to good old Google and Google will tell me how to deal with a scorpion stain. So I did the icing in the validating and all the things they recommend, but I think I had a pretty severe stain since I had been standing on it. So it was kind of given me everything and had and all of a sudden, my feet are numb, and then my hands are numb. And then my friend is known and I can’t drink anything. And so you know, finally decided, like, Hey, we should probably get this checked out. And I hopped in an Uber to get myself to the hospital. And by that time my eyes started shaking. These are all symptoms of scorpion stings that I was not aware of Google did not prepare me for this activity. So that was pretty crazy. I did a 48-hour adventure when it was all said and done. But I, fortunately, had to miss the conference. But luckily, I’m still here to tell the story.

Adam: Oh my gosh, that’s a crazy story. Thank you for

Shirley: Yes, I am grateful that it has not happened since, you know, you did a whole ceiling service in my home so that hopefully these guys can’t get in again. And I’ll knock on wood but so far so good. Since that

Adam: not a lot of scorpions in Michigan are there.

Shirley: No, you know that, that they should probably put that in their advertisement? No scorpion.

Adam: So funny. So funny. As look. I mean, what I found in the marketplace is that things have changed a lot in the past 90 days or so. If you could just share with our listeners, what you’ve seen that have changed, that has changed in the landscape when it comes to the market for SPS in general, and just in general and funding for franchises.

Shirley: Yeah, I mean, you know, I think a lot of folks out there sort of pay attention to what’s been going on just you know, in the world and specifically in our country and are probably familiar with the cares act that was passed just about a month ago on March 27. cares act was primarily focused on providing dollars and relief to existing business owners who, you know maybe going through some challenging times with some of the social distancing protocols that are out there. The one nice benefit that has sort of rolled into new loans for folks is if an SBA loan closes by September 27, so that’s six months from when the cares Act went into place. And again, the loan has to close. So this is not just about approval or application times. But if the loan closes by September 27, the federal government, the Small Business Administration, will be making the first six months’ worth of payments. And, you know, that’s all real money, right. So that’s been one nice benefit that we’ve seen for new loans. Um, one other thing that I think we’ve seen just sort of as a result of interest Interest rates dropping, in general, is that, you know, if you and I had been talking have been talking a few months ago, and we were talking about interest rates for SBA loans, we probably would have been talking seven, seven and a half area, something in that range. Right now, we are looking at interest rates more in the 6% area. So while that’s higher than the mortgage, you know, which is what a lot of folks are used to, it’s low for SBA lending. So that’s sort of five benefits.

Adam: That’s great. And so the six months it’s forgivable. So for instance, if someone has a 10-year loan, right, that would be $1 million. And it wouldn’t affect get a 5% discount or $50,000. Back from the federal government.

Shirley: Well, you know, it’s almost better than that, because the federal government just stepping in and making the payment. Know that the borrower has to make a payment and then file for some sort of reimbursement or anything along those lines. It’s also not a different Were there just tapping it onto the back end? Um, so yeah, yeah. I mean, you know, you’re right, from a dollar perspective that that is a huge benefit. But even just for ease I utilizing this. I said they have made it very easy for folks.

Adam: Very interesting. What and so what kind of shifts? Have you seen your candidates, you deal with a lot of candidates? What, what’s going on with them? What kind of franchises are they interested in that change over the past 60 or 90 days?

Shirley: Well, you know, I think that whether we all wanted it or expected it, or maybe needed it, and we didn’t know it or not, you know, there have been a lot of people out there that have had some time sort of thrown their way in the last month, month and a half here. And I think that one of the things that have given folks the room to do is explore what do I want my future look like? You know, how long do I want to keep working for someone else? Where do I think I might be able to find some success outside of the career that You know, I’m used to and that that I’ve been in for the last 5 10 15 years. So I think it’s interesting because sometimes folks don’t necessarily expect a lot of movement with, you know, new business ownership and a time where maybe things feel uncertain. But again, I think that because then given that time, there are a lot of people out there taking advantage of it, and sort of figuring out what comes next. Whether that is, you know, thinking of maybe maintaining that job in corporate America, and potentially sort of starting something on the side, or making a move out of, you know, their full-time role at the job. They’re in now, to focus on something that may not just bring financial success, but also just could be more fulfilling to them personally. So yeah, you know, we’re talking with a lot of people who maybe weren’t considering this a month and a half ago, but I’ve been given the time to figure out if it could be a good idea. So it’s been really interesting.

Adam: And what do you think? I mean, would you say that With the candidates that you’re talking to, would you say they’re more reflective now where they have more time to research and because of that they might be choosing different options and they would have before me which sectors are you finding that are particularly hot right now?

Shirley: You know, I would say that I mean it brands on we work with hundreds of franchise organizations. So, we still are seeing a pretty steady mix of, you know, home-based service-based businesses versus things like, you know, preschools or gyms. Now, preschools and gyms are not open right this second. So there’s going to be some time involved before they get open. But I mean, I think like, much of the rest of the country, most folks out there are seeing this as sort of a temporary situation. And while it’s temporary, you know, I think you certainly are seeing some folks saying, hey, maybe I do want to look at a business that I know could continue To be open through any social distancing protocols that may come into play, where I think, you know, on the other side of that we’re seeing just some innovation and some difference in you know, business plans and marketing ideas and ways to get you to know, goods and services out to consumers. We’re seeing a lot of faces are sort of innovate on that side, which again, I think is you know, still keeping people confident, whether it is more of a home-based service-based business versus something that, you know, might need more of a brick and mortar location based facility.

Adam: So, I’m going to switch gears, here again, you’ve been doing that for about eight years.

Shirley: I’ve been here for about seven years. Yeah.

Adam: What is the biggest success story you’ve seen in the past seven years when it comes to a franchisee?

Shirley: You know, I think the biggest success story for me is a franchise organization that is growing rapidly right and still at a controlled pace that works for them. And that growth is not just happening in the number of locations sold, but also in the number of locations open. You know, I think that that that’s always very encouraging. Um, and also just, you know, being sort of in this seat that I’m in a fan fund, where my job day in day out is to work directly with potential business owners and help them put their strategies together, help them make sure that they’re, you know, crossing all of their T’s and dotting all their eyes that they’ve explored every angle. I work with a lot of folks who maybe I helped them to open their first franchise back in 2013 when I joined Fran fun, but now we’re on location 5678. And so that for me, you know, those are nice success stories to just know that people are having good experiences and just continuing to grow.

Adam: Is there one that sticks out for you when it comes to franchise business owners like, wow, this person’s done great.

Shirley: Yeah, I mean, I think they’re the gentleman that I worked with, again back in 2000. 13 that comes to mind and he started, he left his job. He was working full time, he left his job to start a service-based sort of coaching business. And that went well. And then he came back and said, Hey, I think that ready for round two. And this time around, I want to look at something that doesn’t rely on me so heavily. So now I’m open to having employees, you know, maybe more of a location-based business. And we ended up opening up a couple of hair salons, and then came back again and said, hey, that’s been good. franchising is treating me well. I like what I’m doing here. Now, I think I would like to get into the fitness arena. And so you know, again, that for me is exciting. Not just that he has multiple businesses, but just that he’s been able to find such a place in franchising, you know, and different opportunities have caught his attention and about his success. So that has been a long.

Adam: That’s great. What a great story. I like that very much in your opinion. What’s the mistake that people make the most what’s the biggest mistake for people that are looking to finance their franchise at the beginning?

Shirley: I think the mistake that people make is assuming that, oh, I’ve gotten a mortgage before and it was pretty easy, I should be fine. I’m just making that assumption before getting into a pre-approval process. And that’s not to say that things would not be fine. But from my perspective, the last place where you want to make assumptions in your decision-making process is on the financing side. It’s really important that not only do you have options available to you but that these options are options that you are educated about, that you are comfortable with, that you are confident utilizing to get that business open. So I’ll have a lot of people say, Oh, you know what, I haven’t picked out a franchise yet. I’m not positive because I’m going to do this. Yeah. Why don’t we hold off on the funding conversation? And for me, I think that having that conversation earlier than later, just give folks another data point to work with. It doesn’t mean you’re committing to anything. But for me, you know, there’s no too early to start to think about funding.

Adam: Thank you so much, surely, and if people want to get a hold of you, how do they go ahead and get ahold of you?

Shirley: So there are several ways that you can find me one reach out to Adam, he has all of my contact information and can get us connected to have a more detailed conversation about what might work for you. And you also can visit our website franfund.com. So kind of franchise funding shortened franfund.com, and there’s a section there where you can request more information. My name is Shirley Keygen, you can pick that from the drop-down menu that you’ll be it’ll ask if you’ve spoken with anyone at Fran funds, you can pick my name there, and that’ll get us connected directly.

Adam: Thank you so much for your time today surely is always really nice talking to you.

Shirley: Yeah, thanks so much for having me with us. Great to be here.

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