Purchasing a franchise is a significant investment. We introduce you to experts who help you explore which options would be the best fit for your particular situation. We do not profit on your financing. It is a free service we offer to you. Our goal is to get you to the right experts and help you make great funding decisions.
Common Franchise Types and Investment Ranges
Brick and Mortar/Retail (Typical Liquid Capital Required: $100K-200K with a beginning Net Worth Requirement Range of $300K-$400K)
Liquid capital requirements vary based on company and number of units or territories you are looking to own. These typically start with a total investment of $250K and increase in investment amount from there. Food franchises often start at $350K and go up from there.
Home Based / Territory Based (Typical Liquid Capital Required: $60K-100K with a Net Worth Requirement Range beginning at $100K-$200K)
These are business-to-business (B2B) and business-to-consumer based (B2C). A normal investment range could be $70-$200K. Close to half of the franchisors we are partnered with fall into this category. Liquidity for an office based franchise can be anywhere from $25-100K.
Some Typical Funding Options Available
Self-Funding
Many investors fund their franchise using existing liquid capital. This accounts for a significant number of new franchises, particularly for B2B and B2C, home and territory based franchises.
Retirement Rollovers
Rolling over all, or part, of a qualified 401K or IRA to fund a franchise is a very common method. You are using your money for part or all of your initial investment. There are ways to set this up as a retirement account and save on taxes in the long run. Many individuals are not aware of this opportunity. Let our experts educate you.
Small Business Administration (SBA) 7A Loans
The Small Business Administration also offers loan options up to $5 Million dollars for franchise start-ups. The timeline is longer than the Express Loan, but the loan is partially guaranteed by the federal government. Typically 20-30% cash injection into the business is required for the loan to be approved.
SBA Working Capital “Express” Loans
This is a very popular option. The Express Loan is for up to $150K and can be funded in as little as 30 days. It has specific qualification requirements set up by the Small Business Administration (SBA). These revolve around, minimum credit score, cash available for injection and personal equity.
Unsecured Loans
Unsecured loans can be a quick way to obtain amounts in the $50-$150K range based on your credit. These are unsecured loans often with an initial rate of 0% for a period of time.
HELOC (Home Equity Line of Credit)
Personal wealth built in home ownership or other real estate holdings can be used to help fund a franchise. This is often used in conjunction with another funding option.
Equipment Leasing
When a franchise requires significant equipment, the equipment provider or other funding partners may offer financing of the equipment.
Investment Portfolio Equity Loans
With this option, you borrow against the value of your stocks, bonds, mutual funds and other securities rather than liquidating them.