GE Capital (GE) Stops Financing Sonic Corp (SONC) Franchisees
GE Capital's (NYSE: GE) franchise finance arm is becoming a lot tougher in pricing and issuing loans for new franchisees.
GE Capital spokesman told Dow Jones stopped short of saying there was a total halt on lending to new franchisees, but he did say the franchise finance arm has become more critical in initiating new loans with franchises.
"We are still active in the restaurant industry and we continue to quote deals where it's competitive and appropriate," White said. "In this environment, we're taking a longer look and even a closer look than we have in different times and that just makes sense."
Actually, on Thursday, Stephen Vaughan, CFO of Sonic Corp (Nasdaq: SONC), told Dow Jones that franchisees of the drive-in chain have been notified by GE Capital's franchise finance arm that it will temporarily stop financing new loans to Sonic franchisees. This is bad for a franchise like Sonic Corp that greatly depends on franchisee growth to increase its bottom line.
Dow Jones noted other franchises have said in recent days that GE Capital has turned them away too.
Sonic Corp. (Sonic) operates and franchises a chain of drive-in restaurants (Sonic Drive-Ins) in the United States.
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