Is there money handling equipment leases for other businesses?
This franchise hopes so.
Whether it profits or not, it’s existence shows that the small business, home business, microenterprise field is growing prominently as people seek leasing options for boostrapping their businesses.
Equipment leasing franchises are an unproven concept. Wirth is one of only two such businesses in the country (the other is part of Volvo, the Swedish truck and equipment maker). Since Wirth began offering franchises last fall, two other franchise units have opened in Dallas and San Diego. Company officials hope to have up to 15 franchises by the end of the year and as many as 100 eventually.
Though Faras says he understands the risks, some industry experts are skeptical about Wirth.
“Credit is a difficult thing to franchise. You really have to know credit to be in that position,” said Credit Suisse financial analyst Moshe Orenbuch, who follows large equipment-leasing companies.
Interest rates tend to be high because leasing is short-term and borrowers can be higher risk. Wirth charges around 9 percent to 14 percent today compared to a bank prime-lending rate of 8.25 percent, Morgan said. Winmark and its franchise owners earn a profit by building fees into the interest rate, much like points that are added to a home mortgage loan.
Wirth franchise owners pay an average of $60,000 to do business in a certain geographic area, including franchise, computer and marketing fees. In exchange, the company provides the brand, the business model, cash for leases, training, marketing and the collection of overdue leases.
No comments yet.