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Banking crisis affects GE Capital lending to new franchisees
September 28, 2008
Cattle Network:GE Capital's franchise finance arm is tightening its lending for new franchisees, the latest sign that Wall Street's turmoil is spreading to small businesses. The lender continues to do business with existing customers but is withholding offering rates until the market settles down.
Sharon Zackfia, a restaurant industry analyst, said in an investor note that Sonic Corp. and Panera Bread Co. were two chains with a heavy reliance on franchise growth that could be most affected.Such moves could impede plans by restaurant operators to remodel existing stores, install new equipment, open new locations or convert existing company-owned stores to franchised locations.
Earlier this week, Sonic announced plans to refranchise hundreds of its underperforming partner stores in which it has at least a 50 percent stake.
Read also, Sonic announces Q4 prelim comps.
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