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GE Buoys Burger King Franchisee's Liquidity

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GE Capital, Franchise Finance, an operating unit of the General Electric Company (GE), recently offered a credit facility worth $11.3 million to Ghai Management Services, a franchisee of Burger King Worldwide, Inc. (BKW). The transaction is expected to enhance the liquidity of Ghai Management Services and facilitate its working capital requirements to drive further growth.

Based in Fremont, CA, Ghai Management Services owns and operates fast food restaurants. The company presently operates as a Burger King franchisee in 38 locations in Northern California and Southern Oregon. At the same time, it operates as a franchisee for Taco Bell Corp., one of the leading brands of quick service restaurant (:QSR) operator Yum! Brands, Inc. (YUM).

Taco Bell is a premier Mexican-style QSR chain serving over 35 million consumers each week through 5,600 restaurants in the U.S. On the other hand, Burger King operates over 12,000 restaurants worldwide, about 90% of which are owned and operated by independent franchisees. The franchise-centric model is widely promulgated in the restaurant industry as it helps to reduce volatility in earnings and enhances cash flow generation.

Ghai Management Services will utilize the credit facility from GE Capital, Franchise Finance to acquire six Taco Bell restaurants in Northern California. Over the years, GE Capital, Franchise Finance has provided loans for the franchise finance market either through direct sales or portfolio acquisition. With over $10 billion in served assets, it primarily serves mid-market operators in the restaurant and hospitality industries across 18,000 property locations.

General Electric is one of the largest and the most diversified technology and financial services corporations in the world. With products and services ranging from aircraft engines, power generation, water processing, and security technology to medical imaging, business and consumer financing, media content and industrial products, the company serves over 100 million customers worldwide.

Its segments include Power & Water, Oil & Gas, Energy Management, Aviation, Healthcare, Transportation, Home & Business Solutions, and GE Capital. With 80 years of experience in consumer financing, GE Capital’s Retail Finance business is one of the most successful retail lenders in the U.S. It offers private label and bankcard credit programs to leading national, regional and independent retailers in the U.S., as well as private label credit programs, promotional and installment lending, bankcards and financial services for consumers through dealers; contractors; manufacturers; healthcare practices; and service providers.

General Electric currently has a Zacks Rank #3 (Hold). Other notable company in the industry include Crane Co. (CR), which carries a Zacks Rank #2 (Buy).

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