What the Fed’s Interest Rate Hike Means for Financing

Jessica SarterFranchise Finance


For the first time in almost a decade, the Fed has raised interest rates. What does this mean for franchising? Mike Rozman, President and CEO of BoeFly shared his thoughts today since franchisees and franchisors alike have raised their hands.

“The economy is healthy and that’s good news for growth,” said Rozman. Coming out of the recession the Fed’s interest rate remained low for so long, which was a clear sign that the economy needed help and support. Rozman continues to say that for franchisors “a healthy economy will mean more competition to source franchise leads; consider bumping up your lead generation budget.” We will continue to see variable rate loans, which most SBA loans fall into the category of, continue to increase. Right now what this means for franchisees is that they will be paying a quarter percent higher interest rate expense. Before franchisees get nervous, keep in mind that rates are still at a historically low rate and will continue to be for some time.
“A good economy, good access to capital at historically low prices and the right unit economics all provide compelling reasons, especially when considered together, to add that additional unit,” noted Rozman.

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