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Capital Access

 

Gaining access to and securing capital is more important for franchisees today than ever. Every week we talk with multi-unit franchisees about how they are growing and the kind of financing it takes for them to achieve their goals and objectives. It's an important topic and sometimes we get some very candid responses.

Anand Gala grew up in the fast food business, helping his mother as she managed a string of 12 Jack in the Box locations. He was only 9 years old. "I stood on a milk crate and worked in uniform as a cashier or cook. I've basically done every position in the restaurant, and that's where I learned the business: at the foot of my mother. It was truly a family business. My elder brother also went through all of the stages of operations and management. My father was involved, but to a lesser extent."

Today Gala runs a much bigger operation. As he began to diversify into Applebee's, Famous Dave's, and Del Taco, the Jack in the Boxes were sold off. A company that once registered $500,000 in sales has grown to $77 million--and he has expanded into new locations in California and Arizona. He's hoping to push that sales figure to $80 million in 2010.

Has the economy forced operational changes on your business? We've increased our focus on cost controls and customer service. We look to retain and attract new guests and improve our bottom line. We look at every opportunity to save money.

How do you forecast in today's economy? I'm not sure we can appropriately forecast for our business in this environment. We will continue to do the best we can with the trends we see and the economic data at hand. That said, there are shocks to the system that cannot be forecasted for.

Where do you find capital for expansion? Our capital is primarily internally generated.

Is capital getting easier to access? Why/why not? No, I have not seen any change in the credit markets and one's ability to access capital.

Have you used private equity, local banks, national banks, other institutions? Why/why not? We have used the national franchise finance companies in the past and we're currently exploring local bank opportunities.

What kind of exit strategy do you have in place? I don't think I have an exit strategy. I think of building a business and building a legacy, maybe for my children. Time will tell if they wish to come into the business. If there isn't an interest I will consider how we might install professional management to run the business, or I may consider selling the business. But it's not something I think about.


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