Boxoffice-11.04.1950

i
j
plans is usually the most costly item involved in the project.
Some architects without any specialized experience in the design
of drive-in theatres will contract to provide the necessary working
documents for an extremely small fee so that they may obtain
some experience in their construction at the expense of the exhibitor.
For those exhibitors who are not interested in the tight
financing method of building a drive-in theatre there are several
sound, businesslike methods of financing.
A corporation may be formed in which the stockholders subscribe
and pay for about 60 per cent of the anticipated cost of
the theatre. A bank loan is then negotiated for the remaining
40 per cent of the required funds. The fact that a drive-in
theatre is strictly a one-purpose development, not suitable for
any other business, makes it an extremely poor risk for a bank
loan, but in instances where the individual stockholders are responsible
businessmen, many banks will make the loans if promisjsory
notes are signed by the corporation and endorsed by each
lof the stockholders as individuals.
The most common method of financing any business is a partnership
in which the full capitalization is paid into the treasury
and each partner secures his share in the venture in any manner
he deems best. In several localities the local indoor exhibitors
have pooled their interests and erected a drive-in theatre to pro-
Itect their investment in the indoor houses. This is smart business
as it keeps control of all movie operations in the hands of the
home-town exhibitors.
There is also the corporation that issued both preferred and
common stock, issuing one share of common stock free with each
share of preferred that is purchased. The number of common
shares issued may be twice the number of preferred and by
making the common stock the voting stock, the promotors may
keep control of the operation even though the financing is done
by others.
Another type of financing that has become popular during
the past few years is one in which the corporation stock is sold
for a nominal sum of about $2.00 per share with the proviso that
the purchasers of said stock agree to lend the corporation the
sum of $100 per share of stock purchased. These loans are secured
by a series of promissory notes covering a five-year period and
paying five per cent interest on the unpaid balances throughout
the years. Thus, at the end of the five-year period, the various
stockholders have received back their original investment, have
been paid interest on their money and still retain their interest
in the theatre in proportion to the amount of stock originally
subscribed.
This method of financing is also a good proposition for the
promoter and is also a good deal for the investors if the promoters
are good businessmen and have a good reputation for
integrity. This method of financing is especially desirable when
the promotion is financed by a group of business acquaintances,
members of a social or fraternal organization, or a group of
indoor exhibitors.
There are, naturally, many variations to each of the plans
outlined, but the examples mentioned may be used as a basis for
developing the many legitimate types of financing that are available.
The Reconstruction Finance Corp. has also matched dollars
with exhibitors in many localities. The one important requirement
for receiving financial assistance from the RFC appears to
be a letter from your local bank stating that your request for a
loan from that institution has been rejected. In several instances
the RF