Funding is the fuel that powers the franchise engine. Yet, for many new business owners, securing capital feels like a black box. In this episode, host Sean McKay sits down with Shay Kleinschmidt, the Vice President of Lending at FranFund. Shay shares her journey from a legal background to becoming a leading voice in franchise finance.

They discuss the realities of SBA lending, why your local bank might be the wrong place to go, and the critical importance of vetting a brand before you sign. Whether you are a first-time franchisee or a franchisor looking to understand the lender's perspective, Shay offers practical, no-nonsense advice.

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1. The "Craigslist" Origin Story: How Shay pivoted from the legal field to franchise lending through an unexpected job posting.
2. The 4 Buckets of SBA Approval: It is not just about a credit score. Learn about equity injection (10-30%), post-close liquidity, collateral, and the hidden "fifth bucket" - character.
3. Why Local Banks Often Fail Franchisees: Shay explains why walking into your local branch can lead to wasted time and why specialized lenders are crucial for startup franchises.
4. The Dangers of Rapid Growth: A warning for emerging brands. Selling units too fast without strong unit economics can damage your reputation with lenders.
5. Due Diligence is Non-Negotiable: Why you must read the FDD and, more importantly, call existing franchisees to ask the tough questions about cash flow and support.

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Shay’s entry into the industry wasn't traditional. In 2012, after layoffs in the legal recruiting sector, she found a Craigslist listing for FranFund. She landed the job, bought "SBA Lending for Dummies," and learned the ropes from the ground up. Today, she manages the entire lending department and executive initiatives.

There is a misconception that SBA loans are risk-free for banks. Shay clarifies that the SBA only offers a guarantee (essentially an insurance policy). The bank still assumes risk and must comply with strict rules. If a borrower defaults, the bank incurs a loss. This is why they require collateral and "skin in the game" from the borrower.

While financials are black and white, lending is still a human business. Shay emphasizes that banks do not have to lend to you. How you present yourself, your organization, and your responsiveness matter. A borrower with messy paperwork or a difficult attitude can derail a deal, even with strong financials.

Shay recounts a story in which a prominent lender abruptly exited the franchise space, leaving many deals in limbo. This highlights the importance of not putting all your eggs in one basket. Both franchisees and franchisors need a diversified network of financial partners to avoid disruption.

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Host Sean McKay brings on long-awaited guest Evan M. Goldman for a candid look at how franchise law really works behind the scenes. Evan talks about walking away from “great money” in a tedious finance job, stumbling onto a franchise law posting on a job website, and spending the last 13 years focused every day on franchise law.

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As a founding partner at The Franchise Firm LLP, Evan explains why he left large firms with massive cost structures to build a smaller practice that better reflects how franchisors and entrepreneurs actually operate. He walks through his work as outside counsel on dispute resolution, his preference for mediation, and why most of his cases settle before anyone steps into court or arbitration.

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Sean and Evan also get specific on startup franchise costs, flat-fee project work instead of hourly billing, and how state registrations in states like New York and Washington can affect timelines for emerging brands.

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👤 Guest Bio

Evan M. Goldman is a founding partner at The Franchise Firm LLP, where he focuses on franchise law and commercial litigation. He has spent more than a decade working with franchisors and franchisees, drafting and registering FDDs, handling state registrations, and serving as outside counsel on disputes nationwide. Evan represents franchisors in mediation, litigation, and arbitration, with a strong emphasis on resolving disputes before they escalate into lengthy, costly court or arbitration proceedings. He also continues to review FDDs for prospective franchisees, keeping him close to both sides of the franchise relationship.

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📌 What We Cover

• How Evan went from sport management and a plan to be a sports agent to discovering franchise law through a job posting on Monster or CareerBuilder
• Leaving a “boring as hell” finance company job with significant money to do more interesting work, even if it meant a temporary pay cut
• Building experience across multiple firms, then launching The Franchise Firm to operate in the entrepreneurial bucket alongside franchisor clients.
• Why large firm cost structures and huge offices do not match a Zoom world, or the realities of supporting small and emerging franchisors
• The role of outside dispute counsel for firms that draft FDDs and registration,s while Evan focuses on mediation and dispute resolution nationwide
• Mediation versus litigation and arbitration, including why more than 90 percent of Evan’s mediations settle and how pre-suit mediation can keep Item 3 of the FDD clean
• A practical breakdown of startup franchisor costs, including legal fees in the 18 to 25 thousand range, consultants, operations manuals, audits, and the need for real marketing dollars
• How project-based flat fees help franchisors budget their year, remove the fear of hourly billing, and let Evan treat work like a full season where good and bad luck average out
• Why New York and Washington often take the longest for state registrati,on and how New York’s inbound and outbound structure adds volume for understaffed regulators
• Cautious franchise marketing requires disclaimers, and short-term sales promises can turn into long-term misrepresentation claims and angry franchisees.ees
• Evan’s rule of thumb on when franchisors should actually sue a franchisee, including trademark issues, holdover operators, and non-compete...

Lighting money on fire with franchise leads that never get a call is a huge miss. On Franchise This, the show where we talk all about franchising, Sean McKay and producer Joseph Lewin are super excited about the qualification piece and what winning actually looks like when you bring in paid media to generate franchise leads.

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They walk through hundreds of leads that never get called, negative brand reputation, and why speed to lead within a few minutes, under five minutes, with a personal phone call or text message has to be the number one thing. They dig into verified phone numbers and email addresses, one-time passwords, liquid capital requirements, SBA loans, and long-term nurture when someone is not ready.

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They talk about hiring a sales rep with experience in the franchise world, a phone setter, a trained franchise sales expert, mutual vetting with the franchisor and another franchisee, nervous first-time buyers, the cowboy person with a hundred franchises, and a sales cycle that might be a month, three months, a year, or even 16 months.

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• Lighting money on fire with thousands of dollars in advertising, hundreds of leads, and not calling a single one
• Why people who fill out a form are waiting, the game of Chase, and why speed to lead under five minutes with a personal phone call or text message is the number one thing
• Verifying the phone number and email address with a one time password so you know with certainty that the person filled out the form
• Confirming liquid capital, SBA loans, required liquid capital amounts, and using the form to filter out people who are not ready right away
• Questions in the form about how soon they want to open, confirming if they are a US citizen, and interest in talking to a franchise consultant
• Negative brand reputation when you never call back, and why a YouTube video of you lighting money on fire might actually do better
• Hiring a sales rep with experience in the franchise world instead of the franchisor doing the calls and making the business look really small
• The phone setter, the trained franchise sales expert, mutual vetting with the franchisor and another franchisee, in person meetings, signatures, loans, and a smooth, well defined process from start to finish

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• Sean McKay
• Joseph Lewin
• SBA loans
• Franchise consultant