December 26, 2023 • 20 mins
Welcome to FranPro Insights Podcast. If you would like to access our most recent content and to receive updates, you can register here: https://franpro.com/
Contact us here Anything@FranPro.com if you:
- Want help finding a franchise
- Would like to be featured on our program
- Would like help producing or want a podcast produced for you
- Are a franchise company and want access to our free ROI Tracker dashboard
In this episode, Lance Hood of FranPro interviews Sam Phelps, director of development at Tenet Financial Group. Sam Phelps is an incredible resource for any franchise organization. If you would like to work with Sam Phelps you can reach him here: https://Franpro.vip/GoTenet
On this call: "Predictable Steps for Funding Your Business" and "Reducing the Likelihood You Will Run Out of Cash or Be Denied."
Also covered:
- Wide variety of debt options, including SBA and unsecured loans
- Selling your story is the biggest factor in getting a franchise loan
- Consistent communication is key to getting loans done on time
- FDD accuracy and performance crucial for funding approval
- Ensure that you're well capitalized to cover unexpected expenses
- And more
Ever wondered how to navigate the world of financial consulting and funding? Our guest for today's episode, Sam Phelps, Director of Development for Tenant Financial Group, shares his journey from banking to consultancy, giving us a glimpse into the inner workings of a company that provides everything from 401k plans to equipment funding. Sam, a recovering banker, highlights the importance of understanding the client's needs and offering solutions that speak to those needs.
In our in-depth conversation, Sam offers a treasure trove of advice for franchise companies and lenders, emphasizing the need for a compelling background story when applying for loans. He explores how technology and automation can ease the stress of running a business, while underlining the importance of communication and capital. Furthermore, he stresses the value of starting with a strong team to avoid unnecessary mistakes. Whether you're curious about financial consulting or seeking funding for your own business, this episode is packed with insights and tips you don't want to miss!
Contact us at Anything@FranPro.com if you:
- Want help finding the right franchise for you
- Would like to be featured on our program
- Would like help to produce or want a podcast produced for you
- Are a franchise company and want Free access to our ROI Tracker dashboard
*Some of the companies we interview compensate us a commission if you purchase something.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Lance Hood (FranPro) (00:00):
Today we have Sam Phelps, the Director of
Development for TenantFinancial.
Sam, welcome to the call.
Sam Phelps (Tenet) (00:07):
Happy to be here, lance, thanks for having
me.
Lance Hood (FranPro) (00:10):
Can you share a little bit about your
background and how you becamethe Director of Development with
Tenant?
Sam Phelps (Tenet) (00:16):
Sure, I think we talked about the
recovering banker who was inbanking for about 12 years,
started my career right out ofcollege there and did a little
bit of everything, as far as theunderwriting administrative
side to the sales side andfinally running an SBA
department, before I departedand made the transition over to
(00:40):
the consulting side, which is.
It's fun for me to get to talkto people, franchise orders,
franchisees and our clients andsay, hey, this is what the
bank's thinking and this is whatwe need to adjust to.
So I've been working with smallbusinesses all my life and just
thoroughly enjoyed it.
(01:00):
I feel like I've learned morein my career than anything from
the individuals I've worked withand getting to hear their
stories and just be a resourcefor them.
So it was kind of a naturaltransition to come over to
Tenant last year, and so I'vereally enjoyed the opportunity
here.
Lance Hood (FranPro) (01:21):
Well, for everybody who doesn't know what
Tenant is, can you give us anidea of what you do, the
different kinds of programs andhow what you do is different
from other companies?
Sam Phelps (Tenet) (01:30):
Sure Tenant Financial Group, first and
foremost, is a financialconsulting company.
We were built around being anadvocate for our clients, being
a resource in this wide world offunding needs for the franchise
portal, and we have a couple ofdifferent ways we can help in
that.
So we are a third partyadministrator for 401k plans,
(01:55):
specifically in the ROBS programand for those that don't know
about that, that is the RolloverBusiness Startup, which allows
you to access your retirementfunds by investing into your own
company much like you would astock on the stock market or a
mutual fund.
You can buy shares of your owncompany and be off to the races.
We do all things in that spaceas well as we are a funding
(02:19):
resource.
We have a network of blendersthat offer a wide variety of
different debt options, as faras SBA, which is a lot of what
we do, as well as unsecuredsignature loans, and then,
finally, equipment funding,whether that is an equipment
loan or a lease.
You try to just make sure thatwe take care of our client first
(02:43):
.
We know that each person thatwalks in our door is different,
with different backgrounds,different risk tolerance,
different things they want toaccomplish, and our goal is to
make sure that we listen to youand then offer you the different
options and or transparent, sothat you can make the best
decision for yourself.
So I would say that is how weare a little different.
We do a lot of listening, wemake sure that we take into
(03:07):
account your situation, and thenwe want to make sure that you
understand and turn over as manystones as you have to in making
your decision, and then we moveforward with whatever works
best for you.
Lance Hood (FranPro) (03:20):
And can you share a couple of, I would
say, disasters or really badsituations that you had to help
the client turn around?
Sam Phelps (Tenet) (03:30):
Well, I think sometimes and we talked
about this earlier, lance it'swhen either the guts started on
their own or have gone down apath that you may think you have
been doing, going the rightdirection.
We have to do a little bit ofcleanup.
I think our staff is reallygood about that.
We're understanding thatsometimes people go, and one of
(03:55):
the things with the ROBS programis it has to be a taxable
corporation and LLC is differentin how it's taxed.
It's not taxed on the corporatelevel.
We see that a lot where folksmaybe already have their
business set up.
We're prepared we help you makethat change.
And then of course not to gettoo far off in the weeds, but it
(04:17):
is my background.
I always have to say with SBAthere's very specific rules.
What we try to do is just getin front of those, and sometimes
we come to clients and theyhave scenarios where it could be
.
Unless they adjust something ormake a change, it could be a
non-starter out of the gate withSBA.
(04:38):
Our goal again is to try to getas many of these questions
answered up front, so theprocess down the road is a lot
more smooth.
Lance Hood (FranPro) (04:48):
So you mean, if somebody sits there and
goes, oh, I've already set upmy LLC, and you're like, and I
want to use it, and you're like,well, you may not be able to
use that for this loan, you runinto those situations.
Sam Phelps (Tenet) (04:59):
Yeah, it happens occasionally, but for
all those listening out there.
It's not the end of everything.
We can make changes and so,again, it just starts with the
conversation and more thanlikely we've seen this scenario
before.
We can help you make changesthat need to be.
(05:20):
But don't be afraid to come tous and they'll feel like you
have to do any homework ahead oftime, where we'll stay on the
call as long as you need to, andwe very, very often, with our
group, do follow-ups andfollow-ups to our follow-ups to
make sure we've got everythingtaken care of.
Lance Hood (FranPro) (05:36):
Yeah, I've had an experience where people
try to do it themselves and theyhave a half baked pie and then
they want me to finish it andI'm like I can't help you very
well at this point.
That's a good analogy.
Sam Phelps (Tenet) (05:49):
It's kind of like if.
I were to go into the kitchenof my wife.
She's Italian, so she's runningthe show.
I'm there to help put thepieces in the pie and if I
listen to her guidance, boy, dowe have a much better pie if I
try to bake it myself.
Lance Hood (FranPro) (06:07):
Yep, or somebody pulling it out of the
oven said here, fix it.
I'm like that's harder.
Sam Phelps (Tenet) (06:13):
Absolutely.
Lance Hood (FranPro) (06:14):
So what are some of the biggest mistakes
, or maybe even false beliefsthat you see that tend to hold
either people buying a franchiseback or franchise companies,
because sometimes they aremaking mistakes and having false
beliefs.
Sam Phelps (Tenet) (06:30):
I think the I'm gonna kind of flip it to the
other side on this for mistakes.
I think a lot of folks arescared that they can't get
funding, that they are notworthy, and so what we try to do
is really have thatconversation to you know what's
the total project cost?
Are you wanting to do one unit,two units, three units?
(06:53):
And really there's usually apath there.
There's usually an option formost people.
So my advice would be is tohave that conversation early.
Don't be afraid to pick up thephone, don't be afraid to
schedule a meeting or ask us toreach out to you, and we
encourage our franchise, ofcourse, to do that.
(07:13):
We much rather you come to uswhen it's something in the gray
area and we see if we can workthe solution, because sometimes
there's something you haven'tthought about.
There's a way we can movethings around, to get creative
on the deal, and so my advicewould be always to get us
involved sooner rather thanlater, and then we can go
(07:36):
through what the options are,the highs and the lows of it and
how it makes sense for you, butyou know I hear that a lot from
our franchise orders thatpeople are nervous about the
funding side of it because it'stheir first commercial
transaction.
It's their first businesstransaction and they don't know
if it's something that they canaccomplish.
(07:57):
And that's what we're here todo is we're here to help ease
that pain as much as we can.
Lance Hood (FranPro) (08:05):
And how do you see top brands doing things
differently than strugglingbrands?
What are those kind ofindicators or signs or things
that you just stand out aboutthe top brands?
Sam Phelps (Tenet) (08:15):
I'd say the top brands are probably the ones
that engage us the most but atthe same time, they are
absolutely relentless in theircommunication, relentless in
making sure that they have gottheir franchisee in a good
position to keep moving forward.
I think once you see afranchise that has a process
(08:40):
down, they are very happy toprovide information, to answer
questions, to make sure thateverybody goes into what their
eyes open.
I think that comes fromexperience I mean, we've all
been there where we can alwaysremember the really good ones
and then the things that weren'treally bad, and so learning
from those situations to makesure you encompass all the
(09:06):
heartaches and all the thingsthat can help that person make a
very educated decision.
So give those to our franchiseeor so we work with, because most
of them do that.
Lance Hood (FranPro) (09:18):
Yeah, I've seen that you have the people
who are new and excited butfiguring it out and the
communication isn't really asconsistent and helpful, so that
you're not a team.
It's almost like to treat itlike a handoff.
But then there's the people whoare very process oriented,
maybe too much process oriented,and in that instance too, they
(09:41):
may or may not communicate withyou, but it's that back and
forth, like we're all on theteam.
Sometimes, as a broker, you seethat you're pulling the client,
the franchisee and the lenderall together and making sure
that everybody is on, knowseverything.
Sam Phelps (Tenet) (09:57):
I think you nailed it Just making sure that
flow of information is as smoothas possible based on the
current situation.
Lance Hood (FranPro) (10:05):
Well, what are some of the most valuable
business advice or realizationsthat you would share with
franchise companies?
Sam Phelps (Tenet) (10:13):
I would say that the transparency you know
the ones we work with that arevery do very well.
Fdds are sharp.
They're very reflective ofwhat's going on in the company.
And then also, you knowrevisiting that every year, what
if we're going to throw themajor thing out for both
franchise owners and franchisees?
(10:34):
It's make sure you're wellcapitalized.
If you think you're going to hitbreak even by day 45, you know
what we might plan for 90 daysto hit that break even.
So you have a little bit extracash and a bank account.
You know our goal is to workingwith the franchise orders and
where we try to have a value addto is we want that person that
(10:57):
when they're done working withus and working with the
franchise or you know, throughthat closing process, all
they're worried about is gettingthat business operational and
pumping along there through thatramp up period.
So capitalization is key.
You know making sure the bankaccounts are full and that they
can cover you so you can besuccessful.
(11:18):
And you know the good ones do agreat job of that.
Lance Hood (FranPro) (11:23):
What's one of the most important factors
with the lenders when it comesto getting a loan closed for a
franchise?
I mean Item 19 play a part,like, what are the big things
that play a part with getting aloan?
Sam Phelps (Tenet) (11:37):
You know I'm going to switch it to some of
the qualitative here.
I mean absolutely the FDD andbreaking down.
How do all the pieces cometogether?
And what Lance is talking aboutis you know, can you pull all
the pieces out?
Because that lender is going tosay, hey, where's all these
funds going to?
It comes out in what they calla source of the use.
Who's sourcing it, Whetherthat's your equity contribution,
(12:00):
your cash, maybe it's Rob'sdollars that we're helping you
with, and also that, that loanpiece, and so that has to be
very specific.
But I would say that thebiggest thing, let's tell your
story.
You know you decide to dofranchising.
You've got a unique background.
Let's let's really sell yoursuccesses.
(12:20):
Let's talk about how you aresuccessful and those you know 20
years of being in this industryhelp to make you the perfect
candidate for this, and so youknow, just making sure that
you're not.
You're not just another person,and that's where we try to help
folks and you know,differentiate themselves the
(12:43):
franchises are going to workwith you to make sure you
understand all the details intheir FDD and we'll help you
check, check, check to make surethat's off the list for the
banker.
But we're really going to pushyou to sell your story because
then this is the opportunity toput yourself on display and then
highlight how you're a perfectfit for this industry, this
(13:05):
franchise, and more worthy ofthe loan.
Lance Hood (FranPro) (13:09):
And those are perfect things for someone
who's looking to buy a franchiseto think about, you know, for
qualifying through the bank andfor being awarded through the
franchise, and that any othertips that you want to give the
franchise companies as far asbeing, how do you say,
(13:30):
presenting themselves not justto the franchisees but to the
banks so that they are morelikely to get a loan?
I mean is, are there anyfactors that the banks are
looking at when they're lookingto fund one of these companies?
Sam Phelps (Tenet) (13:44):
Sure, a lot of it comes down to the
performance of the franchise andbeing able to highlight and
back up.
You know what we're trying toaccomplish in these individual
projects by objective andempirical data, and so a lot of
that's where you're going to getthe questions and underwriting.
If this specific situation isdifferent than you know, what's
(14:07):
in the median, what's in theaverage for performance?
That's reflected on the FDD.
And so really data is what'sgoing to help solidify the
request, to make it an objectivedecision More than subjective,
I think a lot of thesubjectivity comes down to the
individual, like we discussed,and it's awesome.
(14:29):
Tell your story and we aregoing to help you.
You know promote yourself thebest you can, but when it comes
down to the nuts and bolts andyou're working with an
underwriter, what we try to dois make sure it's a very
objective process, that you knowthese financial projections,
this business plan that hasthese numbers and performance
(14:51):
information is backed by goodhard data in a proven method.
Lance Hood (FranPro) (14:58):
And what are some trends or technologies
that are new, that are out there, that you think that people
should be aware of?
Sam Phelps (Tenet) (15:07):
Oh, we're going to go down the rabbit hole
.
It's the big discussion, evenin our world, and as far as
utilizing AI at the moment.
Even as a company, we'restarting to see where we can
automate some of our processesor get help with some of the
putting together things thatnormally used to be a manual
(15:29):
process.
My advice when you look atthese business things is look at
the resources.
I had a mentor that hired methat was the president of the
CEO of the bank.
He said I learned real earlythat my time is very valuable
and if we can find things toalleviate some of that stress
(15:52):
and so we're actually spendingtime helping the business grow,
whether that's utilizing thebookkeeping resources that we
maybe can refer you to, or thefranchise or has set up or
inventory those types of thingsto where you're not necessarily
having to spend hours or hoursafter the closing bell and to
(16:16):
make your life so where you canconcentrate on things will help
the business grow and besuccessful.
Lance Hood (FranPro) (16:23):
Absolutely , because then what you don't
want to do is be so busy.
You don't have a lifestyleUtilizing these tools and
technologies to do that Thingslike AI.
The one thing people don'trealize is it's useful, but what
it does is it reports on what'sbeen written.
It's not, as I would say, fullycreative.
(16:47):
It's looking at what's outthere and it's rewriting what's
out there.
It's more of a reportingfunction than I found, and all
the programs are very differentin how they prompt it and talk
to it.
It's very interesting and veryuseful as a handy tool, but it's
like a fast car that needs agood driver.
Sam Phelps (Tenet) (17:11):
Just because you have it.
What I was going to say is youcan utilize it to its abilities.
I think that's a great analogy.
The comment we make is you'vegot a great top notch symphony
here, but you're the conductorand it's only going to be as
good as the conductor inputtingit.
It's not a replacement for somethings, but if you have
something that's repetitive,that maybe is time consuming,
(17:35):
you can take that off your plate.
It's a great resource.
Lance Hood (FranPro) (17:42):
Next question is why do you think
it's important to have a thinktank like this, where we share
information, come together,collaborate.
Sam Phelps (Tenet) (17:52):
I think it's always good to continue a
conversation that's important,and the reason why I think this
conversation is important is alot of folks have a lot of
misinformation out there.
We talked about getting to usquickly.
Getting to us quickly helps usunderstand what you're trying to
(18:14):
do but, more importantly, putsomething together that they're
going to be very, very happywith and understand all the
different options.
And the important reason why weget together on this lens is
things change and the economy isalways changing.
The lending environment, justthe overall how things work.
Lance Hood (FranPro) (18:37):
It occasionally needs to be tweaked
and so making sure that it'snot quite as scary as a lot of
people think.
Sam Phelps (Tenet) (18:44):
There's a lot of resources out there and
it starts with a conversationlike this.
We're having a conversationhere as part of the webinar
podcast, but this is how we dobusiness.
This is how we talk toindividuals and come on over,
we're ready to talk about it andhopefully everyone's gotten a
(19:07):
couple of different nuggets theycan take with them and
investigate.
But at the same time, I thinkit's just important to keep
uncovering these stones forpeople and see if they can be as
successful as they can withdoing their own research or
getting to a funding partner tohelp get these things off the
(19:27):
ground and make the dreams cometrue.
That's the goal.
Lance Hood (FranPro) (19:30):
Right.
I've seen so many people thatwhere they're nervous to talk to
people but we don't realize isthe experts on your team.
It's your team and it's ashorter, easier, simpler, less
mistakes and corrections tostart with your team than to try
to do a bunch of self-researchand go off in a different
(19:51):
direction, because who knowswhen that stuff was written and
who knows how accurate it was?
Times are changing and so, justlike you, give people that
maybe start with the wrongbusiness entity just be easier
if they just started with theirteam on day one and work with
them.
Well, Sam, I appreciate you.
(20:13):
I want to thank you for joiningus today and sharing your
insights and anyone who'sinterested in Tenant.
You can click the link herehttps://Franpro.
vip/GoTenet.
Well, thank you, Sam.
Sam Phelps (Tenet) (20:23):
Thank you, Lance.
It was a pleasure.
Thank you.
Today we have Sam Phelps, the Director of
Development for TenantFinancial.
Sam, welcome to the call.
Sam Phelps (Tenet) (00:07):
Happy to be here, lance, thanks for having
me.
Lance Hood (FranPro) (00:10):
Can you share a little bit about your
background and how you becamethe Director of Development with
Tenant?
Sam Phelps (Tenet) (00:16):
Sure, I think we talked about the
recovering banker who was inbanking for about 12 years,
started my career right out ofcollege there and did a little
bit of everything, as far as theunderwriting administrative
side to the sales side andfinally running an SBA
department, before I departedand made the transition over to
(00:40):
the consulting side, which is.
It's fun for me to get to talkto people, franchise orders,
franchisees and our clients andsay, hey, this is what the
bank's thinking and this is whatwe need to adjust to.
So I've been working with smallbusinesses all my life and just
thoroughly enjoyed it.
(01:00):
I feel like I've learned morein my career than anything from
the individuals I've worked withand getting to hear their
stories and just be a resourcefor them.
So it was kind of a naturaltransition to come over to
Tenant last year, and so I'vereally enjoyed the opportunity
here.
Lance Hood (FranPro) (01:21):
Well, for everybody who doesn't know what
Tenant is, can you give us anidea of what you do, the
different kinds of programs andhow what you do is different
from other companies?
Sam Phelps (Tenet) (01:30):
Sure Tenant Financial Group, first and
foremost, is a financialconsulting company.
We were built around being anadvocate for our clients, being
a resource in this wide world offunding needs for the franchise
portal, and we have a couple ofdifferent ways we can help in
that.
So we are a third partyadministrator for 401k plans,
(01:55):
specifically in the ROBS programand for those that don't know
about that, that is the RolloverBusiness Startup, which allows
you to access your retirementfunds by investing into your own
company much like you would astock on the stock market or a
mutual fund.
You can buy shares of your owncompany and be off to the races.
We do all things in that spaceas well as we are a funding
(02:19):
resource.
We have a network of blendersthat offer a wide variety of
different debt options, as faras SBA, which is a lot of what
we do, as well as unsecuredsignature loans, and then,
finally, equipment funding,whether that is an equipment
loan or a lease.
You try to just make sure thatwe take care of our client first
(02:43):
.
We know that each person thatwalks in our door is different,
with different backgrounds,different risk tolerance,
different things they want toaccomplish, and our goal is to
make sure that we listen to youand then offer you the different
options and or transparent, sothat you can make the best
decision for yourself.
So I would say that is how weare a little different.
We do a lot of listening, wemake sure that we take into
(03:07):
account your situation, and thenwe want to make sure that you
understand and turn over as manystones as you have to in making
your decision, and then we moveforward with whatever works
best for you.
Lance Hood (FranPro) (03:20):
And can you share a couple of, I would
say, disasters or really badsituations that you had to help
the client turn around?
Sam Phelps (Tenet) (03:30):
Well, I think sometimes and we talked
about this earlier, lance it'swhen either the guts started on
their own or have gone down apath that you may think you have
been doing, going the rightdirection.
We have to do a little bit ofcleanup.
I think our staff is reallygood about that.
We're understanding thatsometimes people go, and one of
(03:55):
the things with the ROBS programis it has to be a taxable
corporation and LLC is differentin how it's taxed.
It's not taxed on the corporatelevel.
We see that a lot where folksmaybe already have their
business set up.
We're prepared we help you makethat change.
And then of course not to gettoo far off in the weeds, but it
(04:17):
is my background.
I always have to say with SBAthere's very specific rules.
What we try to do is just getin front of those, and sometimes
we come to clients and theyhave scenarios where it could be
.
Unless they adjust something ormake a change, it could be a
non-starter out of the gate withSBA.
(04:38):
Our goal again is to try to getas many of these questions
answered up front, so theprocess down the road is a lot
more smooth.
Lance Hood (FranPro) (04:48):
So you mean, if somebody sits there and
goes, oh, I've already set upmy LLC, and you're like, and I
want to use it, and you're like,well, you may not be able to
use that for this loan, you runinto those situations.
Sam Phelps (Tenet) (04:59):
Yeah, it happens occasionally, but for
all those listening out there.
It's not the end of everything.
We can make changes and so,again, it just starts with the
conversation and more thanlikely we've seen this scenario
before.
We can help you make changesthat need to be.
(05:20):
But don't be afraid to come tous and they'll feel like you
have to do any homework ahead oftime, where we'll stay on the
call as long as you need to, andwe very, very often, with our
group, do follow-ups andfollow-ups to our follow-ups to
make sure we've got everythingtaken care of.
Lance Hood (FranPro) (05:36):
Yeah, I've had an experience where people
try to do it themselves and theyhave a half baked pie and then
they want me to finish it andI'm like I can't help you very
well at this point.
That's a good analogy.
Sam Phelps (Tenet) (05:49):
It's kind of like if.
I were to go into the kitchenof my wife.
She's Italian, so she's runningthe show.
I'm there to help put thepieces in the pie and if I
listen to her guidance, boy, dowe have a much better pie if I
try to bake it myself.
Lance Hood (FranPro) (06:07):
Yep, or somebody pulling it out of the
oven said here, fix it.
I'm like that's harder.
Sam Phelps (Tenet) (06:13):
Absolutely.
Lance Hood (FranPro) (06:14):
So what are some of the biggest mistakes
, or maybe even false beliefsthat you see that tend to hold
either people buying a franchiseback or franchise companies,
because sometimes they aremaking mistakes and having false
beliefs.
Sam Phelps (Tenet) (06:30):
I think the I'm gonna kind of flip it to the
other side on this for mistakes.
I think a lot of folks arescared that they can't get
funding, that they are notworthy, and so what we try to do
is really have thatconversation to you know what's
the total project cost?
Are you wanting to do one unit,two units, three units?
(06:53):
And really there's usually apath there.
There's usually an option formost people.
So my advice would be is tohave that conversation early.
Don't be afraid to pick up thephone, don't be afraid to
schedule a meeting or ask us toreach out to you, and we
encourage our franchise, ofcourse, to do that.
(07:13):
We much rather you come to uswhen it's something in the gray
area and we see if we can workthe solution, because sometimes
there's something you haven'tthought about.
There's a way we can movethings around, to get creative
on the deal, and so my advicewould be always to get us
involved sooner rather thanlater, and then we can go
(07:36):
through what the options are,the highs and the lows of it and
how it makes sense for you, butyou know I hear that a lot from
our franchise orders thatpeople are nervous about the
funding side of it because it'stheir first commercial
transaction.
It's their first businesstransaction and they don't know
if it's something that they canaccomplish.
(07:57):
And that's what we're here todo is we're here to help ease
that pain as much as we can.
Lance Hood (FranPro) (08:05):
And how do you see top brands doing things
differently than strugglingbrands?
What are those kind ofindicators or signs or things
that you just stand out aboutthe top brands?
Sam Phelps (Tenet) (08:15):
I'd say the top brands are probably the ones
that engage us the most but atthe same time, they are
absolutely relentless in theircommunication, relentless in
making sure that they have gottheir franchisee in a good
position to keep moving forward.
I think once you see afranchise that has a process
(08:40):
down, they are very happy toprovide information, to answer
questions, to make sure thateverybody goes into what their
eyes open.
I think that comes fromexperience I mean, we've all
been there where we can alwaysremember the really good ones
and then the things that weren'treally bad, and so learning
from those situations to makesure you encompass all the
(09:06):
heartaches and all the thingsthat can help that person make a
very educated decision.
So give those to our franchiseeor so we work with, because most
of them do that.
Lance Hood (FranPro) (09:18):
Yeah, I've seen that you have the people
who are new and excited butfiguring it out and the
communication isn't really asconsistent and helpful, so that
you're not a team.
It's almost like to treat itlike a handoff.
But then there's the people whoare very process oriented,
maybe too much process oriented,and in that instance too, they
(09:41):
may or may not communicate withyou, but it's that back and
forth, like we're all on theteam.
Sometimes, as a broker, you seethat you're pulling the client,
the franchisee and the lenderall together and making sure
that everybody is on, knowseverything.
Sam Phelps (Tenet) (09:57):
I think you nailed it Just making sure that
flow of information is as smoothas possible based on the
current situation.
Lance Hood (FranPro) (10:05):
Well, what are some of the most valuable
business advice or realizationsthat you would share with
franchise companies?
Sam Phelps (Tenet) (10:13):
I would say that the transparency you know
the ones we work with that arevery do very well.
Fdds are sharp.
They're very reflective ofwhat's going on in the company.
And then also, you knowrevisiting that every year, what
if we're going to throw themajor thing out for both
franchise owners and franchisees?
(10:34):
It's make sure you're wellcapitalized.
If you think you're going to hitbreak even by day 45, you know
what we might plan for 90 daysto hit that break even.
So you have a little bit extracash and a bank account.
You know our goal is to workingwith the franchise orders and
where we try to have a value addto is we want that person that
(10:57):
when they're done working withus and working with the
franchise or you know, throughthat closing process, all
they're worried about is gettingthat business operational and
pumping along there through thatramp up period.
So capitalization is key.
You know making sure the bankaccounts are full and that they
can cover you so you can besuccessful.
(11:18):
And you know the good ones do agreat job of that.
Lance Hood (FranPro) (11:23):
What's one of the most important factors
with the lenders when it comesto getting a loan closed for a
franchise?
I mean Item 19 play a part,like, what are the big things
that play a part with getting aloan?
Sam Phelps (Tenet) (11:37):
You know I'm going to switch it to some of
the qualitative here.
I mean absolutely the FDD andbreaking down.
How do all the pieces cometogether?
And what Lance is talking aboutis you know, can you pull all
the pieces out?
Because that lender is going tosay, hey, where's all these
funds going to?
It comes out in what they calla source of the use.
Who's sourcing it, Whetherthat's your equity contribution,
(12:00):
your cash, maybe it's Rob'sdollars that we're helping you
with, and also that, that loanpiece, and so that has to be
very specific.
But I would say that thebiggest thing, let's tell your
story.
You know you decide to dofranchising.
You've got a unique background.
Let's let's really sell yoursuccesses.
(12:20):
Let's talk about how you aresuccessful and those you know 20
years of being in this industryhelp to make you the perfect
candidate for this, and so youknow, just making sure that
you're not.
You're not just another person,and that's where we try to help
folks and you know,differentiate themselves the
(12:43):
franchises are going to workwith you to make sure you
understand all the details intheir FDD and we'll help you
check, check, check to make surethat's off the list for the
banker.
But we're really going to pushyou to sell your story because
then this is the opportunity toput yourself on display and then
highlight how you're a perfectfit for this industry, this
(13:05):
franchise, and more worthy ofthe loan.
Lance Hood (FranPro) (13:09):
And those are perfect things for someone
who's looking to buy a franchiseto think about, you know, for
qualifying through the bank andfor being awarded through the
franchise, and that any othertips that you want to give the
franchise companies as far asbeing, how do you say,
(13:30):
presenting themselves not justto the franchisees but to the
banks so that they are morelikely to get a loan?
I mean is, are there anyfactors that the banks are
looking at when they're lookingto fund one of these companies?
Sam Phelps (Tenet) (13:44):
Sure, a lot of it comes down to the
performance of the franchise andbeing able to highlight and
back up.
You know what we're trying toaccomplish in these individual
projects by objective andempirical data, and so a lot of
that's where you're going to getthe questions and underwriting.
If this specific situation isdifferent than you know, what's
(14:07):
in the median, what's in theaverage for performance?
That's reflected on the FDD.
And so really data is what'sgoing to help solidify the
request, to make it an objectivedecision More than subjective,
I think a lot of thesubjectivity comes down to the
individual, like we discussed,and it's awesome.
(14:29):
Tell your story and we aregoing to help you.
You know promote yourself thebest you can, but when it comes
down to the nuts and bolts andyou're working with an
underwriter, what we try to dois make sure it's a very
objective process, that you knowthese financial projections,
this business plan that hasthese numbers and performance
(14:51):
information is backed by goodhard data in a proven method.
Lance Hood (FranPro) (14:58):
And what are some trends or technologies
that are new, that are out there, that you think that people
should be aware of?
Sam Phelps (Tenet) (15:07):
Oh, we're going to go down the rabbit hole
.
It's the big discussion, evenin our world, and as far as
utilizing AI at the moment.
Even as a company, we'restarting to see where we can
automate some of our processesor get help with some of the
putting together things thatnormally used to be a manual
(15:29):
process.
My advice when you look atthese business things is look at
the resources.
I had a mentor that hired methat was the president of the
CEO of the bank.
He said I learned real earlythat my time is very valuable
and if we can find things toalleviate some of that stress
(15:52):
and so we're actually spendingtime helping the business grow,
whether that's utilizing thebookkeeping resources that we
maybe can refer you to, or thefranchise or has set up or
inventory those types of thingsto where you're not necessarily
having to spend hours or hoursafter the closing bell and to
(16:16):
make your life so where you canconcentrate on things will help
the business grow and besuccessful.
Lance Hood (FranPro) (16:23):
Absolutely , because then what you don't
want to do is be so busy.
You don't have a lifestyleUtilizing these tools and
technologies to do that Thingslike AI.
The one thing people don'trealize is it's useful, but what
it does is it reports on what'sbeen written.
It's not, as I would say, fullycreative.
(16:47):
It's looking at what's outthere and it's rewriting what's
out there.
It's more of a reportingfunction than I found, and all
the programs are very differentin how they prompt it and talk
to it.
It's very interesting and veryuseful as a handy tool, but it's
like a fast car that needs agood driver.
Sam Phelps (Tenet) (17:11):
Just because you have it.
What I was going to say is youcan utilize it to its abilities.
I think that's a great analogy.
The comment we make is you'vegot a great top notch symphony
here, but you're the conductorand it's only going to be as
good as the conductor inputtingit.
It's not a replacement for somethings, but if you have
something that's repetitive,that maybe is time consuming,
(17:35):
you can take that off your plate.
It's a great resource.
Lance Hood (FranPro) (17:42):
Next question is why do you think
it's important to have a thinktank like this, where we share
information, come together,collaborate.
Sam Phelps (Tenet) (17:52):
I think it's always good to continue a
conversation that's important,and the reason why I think this
conversation is important is alot of folks have a lot of
misinformation out there.
We talked about getting to usquickly.
Getting to us quickly helps usunderstand what you're trying to
(18:14):
do but, more importantly, putsomething together that they're
going to be very, very happywith and understand all the
different options.
And the important reason why weget together on this lens is
things change and the economy isalways changing.
The lending environment, justthe overall how things work.
Lance Hood (FranPro) (18:37):
It occasionally needs to be tweaked
and so making sure that it'snot quite as scary as a lot of
people think.
Sam Phelps (Tenet) (18:44):
There's a lot of resources out there and
it starts with a conversationlike this.
We're having a conversationhere as part of the webinar
podcast, but this is how we dobusiness.
This is how we talk toindividuals and come on over,
we're ready to talk about it andhopefully everyone's gotten a
(19:07):
couple of different nuggets theycan take with them and
investigate.
But at the same time, I thinkit's just important to keep
uncovering these stones forpeople and see if they can be as
successful as they can withdoing their own research or
getting to a funding partner tohelp get these things off the
(19:27):
ground and make the dreams cometrue.
That's the goal.
Lance Hood (FranPro) (19:30):
Right.
I've seen so many people thatwhere they're nervous to talk to
people but we don't realize isthe experts on your team.
It's your team and it's ashorter, easier, simpler, less
mistakes and corrections tostart with your team than to try
to do a bunch of self-researchand go off in a different
(19:51):
direction, because who knowswhen that stuff was written and
who knows how accurate it was?
Times are changing and so, justlike you, give people that
maybe start with the wrongbusiness entity just be easier
if they just started with theirteam on day one and work with
them.
Well, Sam, I appreciate you.
(20:13):
I want to thank you for joiningus today and sharing your
insights and anyone who'sinterested in Tenant.
You can click the link herehttps://Franpro.
vip/GoTenet.
Well, thank you, Sam.
Sam Phelps (Tenet) (20:23):
Thank you, Lance.
It was a pleasure.
Thank you.
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