course of study and training to equip them with the
methodology and approach that the franchisor has
developed. Once the initial training is complete, most
franchisors provide ongoing coaching and mentoring
programs to ensure that franchisees get necessary
support in their new venture.
Individuals who believe this type of business will
suit their background and ambitions should carefully investigate all franchise opportunities available,
perhaps even those outside financial services. For
many, franchising is still a new and untried approach, so
it is essential to understand the relationships involved in
a franchise award. A franchise is not something that can
be purchased “off of the shelf.” It is, in fact, an award,
and franchisors are careful when selecting recipients
because they are entrusting franchisees to care for and
promote the brand.
Expanding beyond fast food and automotive products, franchising extends into hundreds of different
industries and services. A financial service franchise
represents a “win situation” for the franchisor, which
enables the expansion of its network. At the same time,
the franchisee is empowered to acquire the knowledge and background of an established business to
operate in their own area. A franchise offers clients a
local contact and an opportunity to do business with
a person across the desk, as opposed to across the
country by telephone or email.
Franchising adds a new dimension to both factoring
and invoice discounting and offers extensive opportunities for would-be entrepreneurs looking for a white-collar franchise opportunity. abfj
DAVID BANFIELD is president of Interface Financial Group.
From the franchisor’s point of view, having franchisees in numerous locations around the country adds a
new dimension to the due diligence aspect of transactions. In a non-franchised environment, the factor or
invoice discounter will have to dispatch individuals to
conduct local on-site due diligence. This is both a timely
and costly part of doing business and can quite often
delay transactions to the point where opportunities are
lost. Under the franchise arrangement, the franchisee is
literally on the spot and able to conduct due diligence in
a much more timely and cost-effective manner. Having
a franchisee conduct the due diligence often produces
a more thorough evaluation since the franchisee will
— should the transaction proceed — have a financial
obligation and financial commitment in the transaction.
From the client’s point of view, having a local contact to
work with face-to-face is an added bonus.
Established System Benefits
The benefits of a factoring or invoice discounting franchise model are similar to those found in any franchise
relationship. A franchise provides an established system
with written-down procedures and substantial history
to rely on. There is no need for franchisees to reinvent
the wheel when setting up the business. Unlike other
entrepreneurs, they can avoid substantial setup costs
for legal paperwork and documentation issues because
the franchisor handles these. All the legalities will be in
place when the franchise is awarded.
An established back-office system will also be
in place which will relieve the franchisee of having
to organize its own procedures. Again, this will be a
tried and tested method that will, for the franchisee,
eliminate much of the paperwork burden of running
the franchise. Technology plays an ever-increasing
role in the business cycle today, and investment in
necessary technology can be expensive and time-consuming. Under the franchise model, the franchisor
invests the time and expense involved in selecting and
installing the technology, and the franchisee benefits
from utilizing those services.
In factoring and invoice discounting, becoming
a franchisee is often a turnkey situation. Operating a
franchise does not necessarily require leasing an office.
Providers can work from home, reducing overhead and
cost. Likewise, there is less need for support staff since
the franchisor will provide back-office services. From a
marketing point of view, because this is a turnkey situation, the franchisor will be able to provide direction in
terms of the desired marketing approach to build the
business based on many years of experience.
As with almost all franchise systems, extensive
training will be provided before the doors open for
business. Franchisees will be required to undertake a
In factoring and invoice discounting, becoming a franchisee
is often a turnkey situation. Operating a franchise does not
necessarily require leasing an office. Providers can work from
home, reducing overhead and cost. Likewise, there is less
need for support staff since the franchisor will provide back-office services. From a marketing point of view, because this
is a turnkey situation, the franchisor will be able to provide
direction in terms of the desired marketing approach to build
the business, based on many years of experience.