Feb 11, 2015

ApplePie Capital Officially Launches Franchise Loan Marketplace

Company Closes First Franchise Loan, Receives Over $25 Million In Capital Demand During Soft Launch, Partners With Phenix Salon Suites

San Francisco, February 11, 2015 ApplePie Capital, the first marketplace lender solely dedicated to the franchise industry, today announced the official launch of its franchise loan marketplace, which connects franchise entrepreneurs looking for capital with qualified investors seeking attractive fixed-income returns.

The company also announced that it closed its first franchise loan, and said it has received over $25 million in capital demand from franchise entrepreneurs since its soft-launch in November. The firm announced that there are now seven franchise brands participating in the marketplace. The latest brand to join is Phenix Salon Suites. ApplePie Capital expects to announce several more brand partnerships in the coming months.

“ApplePie Capital’s marketplace provides fixed-income investors with first-of-its-kind access to franchise debt opportunities and the ability to complete investments online in a matter of minutes,” said ApplePie Capital Co-Founder and CEO Denise Thomas. “The strong demand that we’ve seen from the franchise industry in just a few months shows that franchise entrepreneurs are in real need of a more efficient alternative to traditional lenders.”

A Unique Marketplace

Leveraging state-of-the-art marketplace technology and provisions of the JOBS Act that promote the funding of small businesses, ApplePie Capital’s online marketplace transforms the franchise financing process. “We bring unprecedented speed and efficiency to franchise borrowers who for decades have relied on time-consuming, offline processes,” said Thomas.

ApplePie Capital employs a rigorous proprietary underwriting process to curate investment opportunities in high-quality franchise businesses. The firm partners with franchise brands that have track records of stability and growth and that demonstrate a proven ability to identify qualified entrepreneurs. 

All offerings on the marketplace are franchise loans that ApplePie Capital has committed to fund. Qualified investors can choose to purchase fractional shares of loans. Any remaining portion is funded from a pool of committed capital that ApplePie Capital has raised.

Loans will typically have coupon rates of 8% to 12%, and are secured by the assets of the business and personal guarantees. The minimum investment for each offering is $1,000, with no minimum account size. The low capital commitment enables investors to achieve portfolio diversification in this asset type.

Loan sizes range from $100,000 to $1 million, with terms of three to seven years. All loans are underwritten using ApplePie Capital’s proprietary, multi-factor credit risk model, which analyzes and prices risk at both the franchisor brand and borrower levels.

“We work closely with each of our franchise brand partners to understand their business model, franchisee qualification criteria, and the debt that their operators can reasonably service,” said Thomas. “Franchise businesses offer historical performance and quantitative data that we use in assessing risk, which is a real advantage compared to underwriting other small business loans.”

The first offering on the ApplePie Capital marketplace is a $150,000 loan for a remodel of Phenix Salon Suites’ flagship company store in Colorado Springs, CO. Phenix Salon Suites is a fast-growing brand, with over 80 franchise locations operating in the U.S.

“We are excited to partner with ApplePie Capital to provide a new financing alternative to our franchisees,” said Jason Rivera, CEO of Phenix Salon Suites. “Their approach will accelerate the financing process for our franchisees, which is vital in securing the best locations.”

The first loan closed by ApplePie Capital was $465,000 for a new Einstein Bros Bagels location in San Diego, CA. “We pursued the traditional banking route and found it extremely daunting,” said borrower Marty Mares of Trei, Inc., an Einstein Bros Bagels area developer. “Through SBA financing, you lock up assets through collateralization that may be needed for future stores. We reached out to ApplePie Capital and were able to structure the economics for our first location and create a financial plan for our multi-unit rollout. And the loan provided financial flexibility that an SBA loan simply didn't offer.”

Investors can learn more about franchise debt investments in a new white paper available on the ApplePie Capital website: Why Franchise Debt Belongs in Your Portfolio.