THE BUCKS STOP HERE: SBA LENDING TO FRANCHISING 2010-2012 For more information, please contact Daniel Son at (202) 822-1205 or [email protected] EXECUTIVE SUMMARY SBA lending to franchising in 2012 increased over 60% over 2011, shrinking a credit access gap that has been the focus of industry efforts since the financial crisis. The report, released by the Coleman Report, the National Association of Development Companies (NADCO) and the International Franchise Association (IFA), showed that nearly 3,300 SBA loans went to franchises in 2012 for a total of over $3.8 billion, an increase of 34% in number of loans delivered and a 60% jump in dollar volume. This report is based on data released by the U.S. Small Business Administration and compiled by the Coleman Report. SBA financing for commercial real estate, equipment and leasehold improvements known as “504 loans” increased 67% in 2012 to $2.5 billion in total project finance. 504 loan volume nearly dou- bled between 2010 and 2012, while 7(a) volume ticked up nearly 12%. Loan Number and Volume – 504 Total Project Finance vs. 7(a) 504 504 Total Project Loan 7(a) # 7(a) Loan Volume Year # Loans Loan Volume $ Loans $ 2010 710 $1,360,044,000 2545 $1,301,096,087 2011 675 $1,540,309,000 1786 $1,027,489,280 2012 917 $2,463,076,199 2376 $1,456,886,051 TOTAL 2302 $5,363,429,199 6707 $3,785,471,418 Source: U.S. Small Business Administration Loan Number and Volume – 504 Total Project Finance vs. 7(a) with Third-Party Lender Breakout Year 504 # 504 $ 3rd Party Amt 7(a) # 7(a) $ 2010 710 $540,314,000 $819,730,243 2545 $1,301,096,087 2011 675 $625,685,000 $914,623,854 1786 $1,027,489,280 2012 917 $1,010,331,000 $1,452,745,199 2376 $1,456,886,051 TOTAL 2302 $2,176,330,000 $3,187,099,296 6707 $3,785,471,418 Source: U.S. Small Business Administration Franchising was a major user of 504 loans, securing nearly 15% of the total $2.5 billion 504 project finance volume and 9.5% of the number of 504 loans delivered. The franchise industry captured just over 9% of 7(a) loan volume, or about 5.3% of all 7(a) loans. FRANCHISE FINANCE TOP 50 The report tabulated the number of SBA loans captured by the 50 most active franchise concepts using SBA financing. Subway (573), Dairy Queen (182), Jimmy John’s (176), Dunkin’ Donuts (166), Anytime Fitness (154), Choice Hotels (136), Sport Clips (130), Ace Hardware (125), Days Inn (119), Little Caesar’s Pizza (112), Culver’s Frozen Custard (108) and Holiday Inn Express (107) captured the highest number of SBA loans. NADCO IFA SBA LOAN REPORT Coleman Top 50 Franchise Systems by Calander Year 2010-­‐2012 SUBWAY SANDWICH SHOP 504 # 504 $ 3rdPartyAmt 7(a) # 7(a) $ 573 Total SBA Loans 2010 24 $6,415,000 $8,425,074 202 $48,541,600 2011 20 $7,156,000 $9,466,959 147 $32,478,015 2012 11 $7,110,000 $8,743,555 169 $41,001,690 TOTAL 55 $20,681,000 $26,635,588 518 $122,021,305 DAIRY QUEEN 504 # 504 $ 3rdPartyAmt 7(a) # 7(a) $ 182 Total SBA Loans 2010 22 $6,172,000 $9,272,652 56 $28,074,000 2011 12 $5,942,000 $7,404,548 36 $13,917,000 2012 20 $11,722,000 $15,004,604 36 $13,197,695 TOTAL 54 $23,836,000 $31,681,804 128 $55,188,695 JIMMY JOHN'S 504 # 504 $ 3rdPartyAmt 7(a) # 7(a) $ 176 Total SBA Loans 2010 6 $2,414,000 $3,664,648 51 $15,090,400 2011 8 $1,981,000 $2,538,353 45 $13,196,200 2012 7 $2,845,000 $3,664,648 59 $20,168,500 TOTAL 21 $7,240,000 $9,867,649 155 $48,455,100 DUNKIN DONUTS 504 # 504 $ 3rdPartyAmt 7(a) # 7(a) $ 166 Total SBA Loans 2010 8 $2,840,000 $3,589,176 58 $43,235,900 2011 5 $2,449,000 $2,841,872 29 $15,376,700 2012 19 $11,277,000 $14,085,399 47 $22,446,400 TOTAL 32 $16,566,000 $20,516,447 134 $81,059,000 ANYTIME FITNESS 504 # 504 $ 3rdPartyAmt 7(a) # 7(a) $ 154 Total SBA Loans 2010 3 $658,000 $742,000 44 $10,713,600 2011 6 $3,025,000 $3,488,250 37 $5,764,400 2012 7 $2,714,000 $3,425,596 57 $13,703,900 TOTAL 16 $6,397,000 $7,655,846 138 $30,181,900 CHOICE HOTELS INTERNATIONAL INC. 504 # 504 $ 3rdPartyAmt 7(a) # 7(a) $ 136 Total SBA Loans 2010 12 $16,638,000 $31,213,238 17 $33,216,500 2011 18 $22,670,000 $34,166,646 19 $31,646,000 2012 41 $51,455,000 $69,180,742 29 $56,139,500 TOTAL 71 $90,763,000 $134,560,626 65 $121,002,000 SPORTS CLIPS 504 # 504 $ 3rdPartyAmt 7(a) # 7(a) $ 130 Total SBA Loans 2010 0 $0 $0 45 $8,115,200 2011 0 $0 $0 21 $3,537,200 2012 0 $0 $0 64 $11,647,100 TOTAL 0 $0 $0 130 $23,299,500 ACE HARDWARE 504 # 504 $ 3rdPartyAmt 7(a) # 7(a) $ 125 Total SBA Loans 2010 11 $6,088,000 $7,536,548 33 $18,749,100 2011 10 $8,050,000 $8,989,000 24 $11,633,300 2012 15 $10,826,000 $13,584,599 32 $16,682,700 TOTAL 36 $24,964,000 $30,110,147 89 $47,065,100 DAYS INN 504 # 504 $ 3rdPartyAmt 7(a) # 7(a) $ 119 Total SBA Loans 2010 6 $5,345,000 $8,782,090 29 $47,405,500 2011 8 $5,997,000 $8,015,265 27 $42,242,900 2012 15 $11,566,000 $16,158,397 34 $71,662,000 NADCO IFA SBA LOAN REPORT Coleman Top 50 Franchise Systems by Calander Year 2010-­‐2012 SUBWAY SANDWICH SHOP 504 # 504 $ 3rdPartyAmt 7(a) # 7(a) $ 573 Total SBA Loans 2010 24 $6,415,000 $8,425,074 202 $48,541,600 2011 20 $7,156,000 $9,466,959 147 $32,478,015 2012 11 $7,110,000 $8,743,555 169 $41,001,690 TOTAL 55 $20,681,000 $26,635,588 518 $122,021,305 DAIRY QUEEN 504 # 504 $ 3rdPartyAmt 7(a) # 7(a) $ 182 Total SBA Loans 2010 22 $6,172,000 $9,272,652 56 $28,074,000 2011 12 $5,942,000 $7,404,548 36 $13,917,000 2012 20 $11,722,000 $15,004,604 36 $13,197,695 TOTAL 54 $23,836,000 $31,681,804 128 $55,188,695 JIMMY JOHN'S 504 # 504 $ 3rdPartyAmt 7(a) # 7(a) $ 176 Total SBA Loans 2010 6 $2,414,000 $3,664,648 51 $15,090,400 2011 8 $1,981,000 $2,538,353 45 $13,196,200 2012 7 $2,845,000 $3,664,648 59 $20,168,500 TOTAL 21 $7,240,000 $9,867,649 155 $48,455,100 DUNKIN DONUTS 504 # 504 $ 3rdPartyAmt 7(a) # 7(a) $ 166 Total SBA Loans 2010 8 $2,840,000 $3,589,176 58 $43,235,900 2011 5 $2,449,000 $2,841,872 29 $15,376,700 2012 19 $11,277,000 $14,085,399 47 $22,446,400 TOTAL 32 $16,566,000 $20,516,447 134 $81,059,000 ANYTIME FITNESS 504 # 504 $ 3rdPartyAmt 7(a) # 7(a) $ 154 Total SBA Loans 2010 3 $658,000 $742,000 44 $10,713,600 2011 6 $3,025,000 $3,488,250 37 $5,764,400 2012 7 $2,714,000 $3,425,596 57 $13,703,900 TOTAL 16 $6,397,000 $7,655,846 138 $30,181,900 CHOICE HOTELS INTERNATIONAL INC. 504 # 504 $ 3rdPartyAmt 7(a) # 7(a) $ 136 Total SBA Loans 2010 12 $16,638,000 $31,213,238 17 $33,216,500 2011 18 $22,670,000 $34,166,646 19 $31,646,000 2012 41 $51,455,000 $69,180,742 29 $56,139,500 TOTAL 71 $90,763,000 $134,560,626 65 $121,002,000 SPORTS CLIPS 504 # 504 $ 3rdPartyAmt 7(a) # 7(a) $ 130 Total SBA Loans 2010 0 $0 $0 45 $8,115,200 2011 0 $0 $0 21 $3,537,200 2012 0 $0 $0 64 $11,647,100 TOTAL 0 $0 $0 130 $23,299,500 ACE HARDWARE 504 # 504 $ 3rdPartyAmt 7(a) # 7(a) $ 125 Total SBA Loans 2010 11 $6,088,000 $7,536,548 33 $18,749,100 2011 10 $8,050,000 $8,989,000 24 $11,633,300 2012 15 $10,826,000 $13,584,599 32 $16,682,700 TOTAL 36 $24,964,000 $30,110,147 89 $47,065,100 DAYS INN 504 # 504 $ 3rdPartyAmt 7(a) # 7(a) $ 119 Total SBA Loans 2010 6 $5,345,000 $8,782,090 29 $47,405,500 2011 8 $5,997,000 $8,015,265 27 $42,242,900 2012 15 $11,566,000 $16,158,397 34 $71,662,000 TOTAL 29 $22,908,000 $32,955,752 90 $161,310,400 LITTLE CEASAR'S PIZZA 504 # 504 $ 3rdPartyAmt 7(a) # 7(a) $ 112 Total SBA Loans 2010 1 $285,000 $350,000 44 $10,598,300 2011 3 $674,000 $924,650 30 $6,955,200 2012 1 $147,000 $175,000 33 $7,348,711 TOTAL 5 $1,106,000 $1,449,650 107 $24,902,211 CULVER'S FROZEN CUSTARD 504 # 504 $ 3rdPartyAmt 7(a) # 7(a) $ 108 Total SBA Loans 2010 17 $11,450,000 $15,824,754 17 $18,568,900 2011 21 $13,711,000 $18,007,879 11 $6,962,200 2012 23 $21,725,000 $27,761,149 19 $19,117,400 TOTAL 61 $46,886,000 $61,593,782 47 $44,648,500 HOLIDAY INN EXPRESS 504 # 504 $ 3rdPartyAmt 7(a) # 7(a) $ 107 Total SBA Loans 2010 25 $47,695,000 $79,949,203 17 $48,207,800 2011 24 $54,012,000 $83,716,693 13 $35,948,000 2012 21 $47,458,000 $71,700,187 7 $24,580,000 TOTAL 70 $149,165,000 $235,366,083 37 $108,735,800 SUPER 8 MOTEL 504 # 504 $ 3rdPartyAmt 7(a) # 7(a) $ 98 Total SBA Loans 2010 7 $4,541,000 $7,028,500 22 $40,332,600 2011 10 $6,848,000 $10,029,500 18 $22,164,800 2012 20 $13,566,000 $19,221,347 21 $32,443,000 TOTAL 37 $24,955,000 $36,279,347 61 $94,940,400 BEST WESTERN INN 504 # 504 $ 3rdPartyAmt 7(a) # 7(a) $ 92 Total SBA Loans 2010 13 $17,372,000 $27,766,072 13 $30,655,900 2011 14 $17,549,000 $36,941,247 10 $19,801,800 2012 23 $36,255,000 $47,498,753 19 $29,705,700 TOTAL 50 $71,176,000 $112,206,072 42 $80,163,400 FIREHOUSE SUBS 504 # 504 $ 3rdPartyAmt 7(a) # 7(a) $ 91 Total SBA Loans 2010 0 $0 $0 26 $5,544,500 2011 0 $0 $0 23 $5,454,503 2012 0 $0 $0 42 $10,373,800 TOTAL 0 $0 $0 91 $21,372,803 THE UPS STORE 504 # 504 $ 3rdPartyAmt 7(a) # 7(a) $ 84 Total SBA Loans 2010 1 $428,000 $527,500 35 $3,690,700 2011 1 $256,000 $310,000 20 $2,786,600 2012 0 $0 $0 27 $6,407,700 TOTAL 2 $684,000 $837,500 82 $12,885,000 HAMPTON INNS 504 # 504 $ 3rdPartyAmt 7(a) # 7(a) $ 81 Total SBA Loans 2010 18 $41,335,000 $68,430,161 5 $17,408,000 2011 15 $37,861,000 $53,031,085 8 $34,920,000 2012 30 $77,069,000 $128,634,703 5 $15,377,300 TOTAL 63 $156,265,000 $250,095,949 18 $67,705,300 CHEVRON (GAS STATION) 504 # 504 $ 3rdPartyAmt 7(a) # 7(a) $ 76 Total SBA Loans 2010 6 $5,250,000 $8,161,489 10 $10,572,500 2011 3 $2,555,000 $3,353,919 15 $25,645,000 2012 13 $8,387,000 $9,996,734 29 $39,070,900 TOTAL 22 $16,192,000 $21,512,142 54 $75,288,400 PRIMROSE SCHOOL (DAYCARE) 504 # 504 $ 3rdPartyAmt 7(a) # 7(a) $ 75 Total SBA Loans 2010 9 $10,641,000 $13,555,982 16 $25,597,300 TOTAL 29 $22,908,000 $32,955,752 90 $161,310,400 LITTLE CEASAR'S PIZZA 504 # 504 $ 3rdPartyAmt 7(a) # 7(a)