Wondering how to finance a franchise with no money? You’ve come to the right place! The franchise business model is very popular because it offers individuals the opportunity to become a business owner with a significantly lower risk. Franchises tend to have an premade business plan that has proven to be successful in the past. However, buying a franchise typically requires a lot of money.
The cost of a franchise can vary significantly based on the brand and type of business, particularly if you’re looking to finance a franchise with no money. The initial fee that most franchisees have to pay can range anywhere from $10,000 to $200,000. Franchisees also have to pay royalties, and the royalty fee structure can be set up differently from brand to brand.
While starting a franchise is cheaper than the typical small business, it is still expensive. There are several ways to fund a franchise, including franchisor financing, traditional bank loans, and Small Business Administration (SBA) loans.
If you have your mind on a particular brand, you can do some research to see if they offer franchisor financing. Franchisor financing may require you to have very good credit. The franchisor will also typically require some initial investment from you to show your commitment to the franchise.
A traditional bank loan requires you to have a good to high personal credit score, a good credit-utilization ratio, and a long history of credit with banks. Going to the SBA is another way to fund your future franchise. The SBA doesn’t provide loans. Instead, they guarantee a loan from a bank or credit union. This method is a great option for someone with a low credit score who won’t get approved for a small business loan independently.
Funding a franchise can be a great way to bust into the small business market without starting a typical small business, but it can still be an expensive endeavor. There are many different ways to find funding for your franchise, including franchisor financing and receiving a traditional bank loan. Contact us if you have any questions and we’ll be more than happy to help!