Alexius forms franchise financing affiliate.
Alexius forms franchise financing affiliate, Frescoe
Alexius, LLC, a Denver-based managed legal services company which serves numerous brands within the franchise community, is pleased to announce the formation of its affiliate, Frescoe, LLC (“Frescoe”).
Frescoe will provide two unique services to the franchise community: (1) it will facilitate the creation and management of impound accounts for franchisors requiring some form of financial assurance in order to secure franchise registration in the states of California, Illinois, Maryland, Minnesota, New York, Virginia, and Washington; and (2) it will provide competitively priced escrow services for franchise companies engaged in the sale or acquisition of company-owned stores and other mergers and acquisitions activity.
Each of the aforementioned registration states can require franchisors to deposit all initial franchise fees due to the franchisor into a restricted account in a bank located in that particular registration state. The funds from these accounts cannot be released until the franchisor has substantially completed all of its pre-opening obligations and the franchisee is ready to open for business.
Despite the restricted nature of these accounts, impound accounts are advantageous to the franchisor and its franchisees. For the franchisor, this approach ensures that the funds from the initial franchise fees are immediately available to the franchisor when the franchisee is ready to open for business. At the same time, this approach benefits franchisees by preventing undercapitalized franchisors from having the ability to unwisely spend the franchisees’ initial franchise fees before they have provided their franchisees with all of the initial services they require to successfully open and operate their franchises.
Frescoe has priced its services in a manner that will make opening these accounts more affordable than securing a performance bond or working directly with the escrow department of a bank in these registration states. Furthermore, the fee paid to open and manage an impound account will be minimal in comparison to the risks incurred by a franchisor who chooses to defer collection of the initial franchise fee and hopes that the franchisee will still be able to pay the initial franchise fee when it opens for business.
“We have watched our clients struggle for years with financial assurance requirements,” said Frescoe’s President, Kevin Hein. “First, many small and emerging franchisors do not have access to additional capital or affiliated entities that can provide guarantees. Second, performance bonds can cost many thousands of dollars on an annual basis, must be paid for in full as a condition of registration (even if the franchisor has no actual franchise prospects in the given state), and are often not available in some of these states. Third, when a franchisors choose to defer initial franchise fees and other start-up fees, they often find that the money to pay these fees is no longer available when the franchisees are ready to open the location for business. For these reasons, we are pleased to be able to offer a reasonably priced solution that provides the ultimate in security for the franchisor and its franchisees in these states.”
As of the date of this press release, Frescoe has secured a banking relationship in California and is now offering impound services in California. Frescoe’s management team anticipates the company will be able to offer impound services in the remaining six aforementioned registration states by the end of the first quarter in 2018.