Dominos Thaws Franchisee Credit Freeze by Becoming a Lender

As franchisees struggle to find capital from lenders, some large franchisors are thinking of putting a new face across the negotiation table: their own.

So far, Domino’s Pizza Inc. is the only franchisor to commit to offering up its own cash. Officials said this month it would offer “short-term financial support and solutions,” such as small loans or payment deferrals, for strong operators who are looking to purchase additional locations. Others, including Burger King Corp., Tim Hortons Inc. and Sonic Corp., have drawn speculation from industry observers that they also may step in where other lenders have left off.

. . . “It will never be my preference to provide financing to our franchisees,” David Brandon, Domino’s chairman and chief executive, said this month during an investor conference call. “We would rather keep our relationship with them focused on being the franchisor rather than their bank. However, we are wading through uncharted waters.” [Nation's Restaurant News $$]

Yet one more sign on how difficult it is for franchise owners to find credit among lenders in this current credit crunch.

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