The #1 Mistake That Destroys Emerging Franchise Brands (And Nobody Talks About It)

In this episode, Erik is joined by Sherri Seiber, president of FranFund, to dive deep into the pitfalls and must-knows for emerging franchisors—and the critical importance of funding, accurate FDDs, and realistic projections.

🔑 Key Takeaways:

🚩 Red flags when franchisees are only allowed to call 3 out of 20 franchisees.

💰 Why underfunded franchisees are a risk to your brand’s survival.

📊 The importance of Item 7 in the FDD—and how lowballing can backfire.

🧠 What lenders really look at when evaluating a franchise brand.

🧾 Item 20 explained: why losing franchise units hurts more than you think.

🏛️ The return of the SBA Franchise Directory (and why it matters).

📉 The Coleman Report: the “credit report” for franchise loan history.

🏗️ Real estate delays and overspending on flagship locations = long-term pain.

🙅‍♂️ Why saying “no” to an unqualified candidate is a gift, not a failure.

📣 Resources Mentioned:

✅ Join the free Franchise Secrets Facebook Group → https://FranchiseSecrets.com/facebook

✅ Learn about the Franchisor Mastermind → https://ScalableFranchise.com

⏱️ Timestamps:

00:00 – Red flag: Only allowing 3 franchisee references

02:00 – The danger of poorly capitalized emerging brands

06:00 – Underqualified buyers & the franchise fee trap

10:00 – Visualizing burn rate and the path to break even

13:00 – Why an inaccurate Item 7 can ruin lender trust

20:00 – The power of Item 20 and why lost units matter

23:30 – The Coleman Report: Franchise credit score explained

28:00 – SBA lending changes coming June 1st

37:00 – Costly buildout mistakes by franchisees

45:00 – Real estate scarcity cripples scaling

50:00 – When FranFund says “no,” it’s for your brand’s good

💬 Final Thoughts:

If you’re an emerging franchisor—or thinking about becoming one—this episode is a must-listen. Your first 10–20 franchisees define your brand’s story, reputation, and lender viability. Don’t build a brand on hype. Build it on solid systems, funding, and trust.

👍 Like, Subscribe & Share if you found value.

🎧 Follow the Franchise Secrets Podcast for more expert conversations!

Connect with Sherri and FranFund here:

Website: https://www.franfund.com/

Linkedin: https://www.linkedin.com/in/sherriseiber/

Connect with Erik Van Horn:

🌐 Website - https://franchisesecrets.com/

📷 Instagram - https://www.instagram.com/erikvanhorn/

👍 Facebook - https://www.facebook.com/erik.v.horn/

💼 LinkedIn - https://www.linkedin.com/in/evanhorn/

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