"The FRANdata Bank Credit Report provides an accurate and thorough third party representation of our Brand in a format

that lenders understand. It has been a great resource for streamlining new relationships with both National Lenders and a franchisee's Local Bank." - Adam Scott, COO & Co-Founder, Wing Zone Franchise

BankCreditReport
In todays franchisee lending environment, many of the larger, franchise experienced lenders that historically provided franchisee loans have curtailed or exitedlending.Withtheirdeparturewentmanyofthepreferredlenderprograms youreliedupon.Accesstodebtfinancinghasshiftedtowardslocalbanksthathave littleornoexperiencewithyourbrand.Sowhataretheselocal,largelyfranchise inexperienced,lenderslookingfor? Thebestwaytogetthemcomfortablequicklyistodotheirriskevaluationworkfor them,usingbankingterminology,andanalyzingstandardunderwritingtopics.The Bank Credit Report gives you a powerful tool to provide to banks: An objectively prepared, credit departmentstyle evaluation of your brands risk factors franchisor financial and operational risks, and franchise system and franchise unit performancerisks. With a 20 year reputation of being the objective and comprehensive source of information about franchising, banks have come to rely on FRANdatas findings. BanksknowthatFRANdatahasagoodunderstandingofhowtoassessfranchising lendingrisksandcanputthoserisksincontextforeasierevaluation. ToLearnMore:

FRANdata www.frandata.com 800.485.9570

BANKCREDITREPORT(BCR)

Theprimaryresponsibilityofabankcreditanalystistoassesstherisksofthefranchisee borrower.Buttodaybanksarealsotakingamuchcloserlookatthebrandassociatedwiththe franchiseeloan.Becausemanylocallendersarenotexperiencedfranchiselenders,theBank CreditReportprovidesapeergroupforcomparativeriskanalysispurposes. Thefranchisepeergroupthatisselectedisbasedonmultipleobjectivemeasuressuchassize, industry/sector,brandlifecyclephase,andfranchisebusinessmodelinordertogive prospectivelenderscontextforyourbrand'sperformance. Oncethebrandsareselected,FRANdatausesaseriesofbankingriskmetricstoanalyze,in words,tablesandgraphs,aparticularbrandagainstthispeergroup.Wherethesubject brandsmetricsdivergefromthepeergroup,additionalinsightsarenoted.Ifappropriate,we includefranchisormanagementcommentsrelatedtospecificrisks.

WhatAreSomeExamplesofFranchiseRiskMetrics?
Brand

Franchisorfinancialandoperationalrisks,andfranchisesystem A andfranchiseunitperformancerisksareallimportant.Herearea B fewexamples: C D Example#1Wherethemoneygoesandhowitcompares:Initial fees,initialinvestment,ongoingfees,andultimatelyhowunitperformanceandunitinvestment compare. TheBCRmodelswhattheaveragefranchiseeinyoursystemandyourpeerscouldexpectin startupandongoingfranchiserelatedcosts.

SalestoAverage InitialInvestment Ratio 0.79 1.12 0.95 1.35

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Example#2Howthefranchisesytemhasgrownovertimeandhowsuccessfulfranchisees havebeeninkeepingtheirunitsoperating:TheBCRexaminessystemperformanceinmany ways,usingnonfranchisebankingterminology: SBAperformancebybrand Historicalunitgrowthtrendsbybrand Franchiseesupportbybrand Projectedunitgrowthbybrand Franchisingrelatedlitigationbybrand Unitcontinuityperformancebybrand Unitfinancialperformancebybrand UnitContinuity
%of Discontinued Units A 19 30 560 3.4% B 0 1 27 0.0% D 7 8 219 3.2% *Sumof"notrenewed","reacquired","canceled","other" Brand Discontinued Transfers Units* Total Units %ofUnitsWith Continuous Operation 96.6% 100.0% 96.8%

SBALoanPerformanceDataasofSeptember2008
Disbursements 121 67 248 Amount Disbursed $24,415 $123,900 $542,889 Failure Percentage 8.26% 2.5% 6.9% ChargeOff Percentage 1.71% 1.1% 3.4%

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Example#3Howwell,financiallyandoperationally,theFranchisorhasperformed. Franchisorfinancialanalysisincludes: Franchisorrevenuetrend(3year) Franchisorincometrend(3year) Franchisortotalassetstrend(3year) Franchisorfinancialratios(Profitability,Liquidity, Leverage) These are just some of the risk factors found in a standard BCR and the examples above are abbreviated here. Depending on how a specific brand compares, additional analysis and management comments may be added. Without a basis to understand the risk factors, a lender may never even get to an evaluation of the franchiseesapplication. FRANdatasBCRmakesitaseasyaspossibleforbankstogetcomfortablewithbrandriskand getpastittoafairconsiderationofyourfranchisee.Ourexperienceletsusevengosofarasto laytheBCRoutinawayfamiliartobanksforanalyzingrisksandincludestabularandgraphical visualstoenhanceinterpretation.

HowdoILearnMore?

For20yearsnowFRANdatahasbeenanalyzingfranchisesystemsofallkinds,ineveryindustry, of every size, and at every stage of growth. And we have over a decade of experience developing franchise capital access analysis products. We will evaluate your systems creditworthinessandprovideyouwiththemostusefulanalysisreportwecan,objectivelyand accurately. Ifyou'dliketoseeasampleofastandardBankCreditReportanddiscusshowFRANdatacould doaBCRforyourfranchise,justgiveusacallat800.485.9570.OurClientSolutionsSpecialists willbegladtodiscussaprojectwithyou.

FRANdata www.frandata.com 800.485.9570

FRANdata|www.frandata.com|800.485.9570