What franchise costs typically include
- Initial franchise fee — paid to the franchisor for the right to operate under the brand
- Build-out and equipment — often the largest cost, especially for food service and retail concepts
- Initial inventory — opening stock required by the franchisor's standards
- Working capital reserve — most franchisors and lenders expect 3-6 months of operating cash held in reserve
Financing paths for franchise owners
- SBA 7(a) loans — the most common path for franchise purchases when the brand is listed on the SBA Franchise Directory; see our full SBA loans guide
- Franchisor or preferred-lender financing — some brands offer in-house financing or have relationships with lenders familiar with their model
- Equipment financing — for kitchen equipment, fixtures, or specialized machinery tied to the franchise concept; see equipment financing
- Revenue-based financing — once the location is open and generating deposits, working capital and MCA programs become available for reinvestment or a second location
beyond your personal credit and available collateral, lenders look closely at the franchise's Item 19 financial performance representation (if disclosed) and how many other locations of that brand are currently being financed successfully — established, proven brands typically underwrite more smoothly than new or unproven concepts.
Before you apply
- Review the Franchise Disclosure Document (FDD) in full, especially Item 7 (estimated initial investment) and Item 19 (financial performance)
- Get a clear build-out and equipment quote before estimating your funding need
- Have your personal financial statement and credit history ready — see the document checklist
- Budget for the working capital reserve, not just the franchise fee and build-out
Already operating and need capital for a second location or a slow stretch? Compare working capital or revenue based financing. Approval and terms are always subject to lender underwriting; nothing here is a guarantee of approval.
See your funding options in 60 seconds
No documents to start, and the short form uses a soft check only.
Related reading: Buying an existing location instead? See how to get a loan to buy a business.
Frequently Asked Questions
Can I get an SBA loan to buy a franchise?
Yes, provided the brand is listed on the SBA Franchise Directory. Underwriting still reviews your personal credit, collateral, and the franchise's financial performance representation.
Will the franchisor help me get financing?
Many established franchisors have preferred-lender relationships or in-house financing for part of the investment. Always compare against outside financing.