5 Ways to Fund the Purchase of a Franchise

Buying a franchise is one of the most exciting decisions you can make — but it's also a significant financial commitment. The good news? You have more funding options than you might think.

SBA Loans (Small Business Administration)

SBA loans are one of the most popular ways to finance a franchise. The SBA 7(a) loan program can cover up to 90% of your total investment, with longer repayment terms and lower interest rates than conventional business loans. Many franchises are even pre-approved on the SBA's Franchise Registry, which speeds up the process considerably.

ROBS (Rollover for Business Startups)

If you have a 401(k) or IRA, you may be able to use those funds to buy a franchise — without paying early withdrawal penalties or taxes. This strategy, known as ROBS, allows you to roll your retirement funds into a C-corporation that then invests in your franchise. It's a legitimate IRS-recognized strategy, but it requires working with a qualified ROBS provider.

Home Equity Line of Credit (HELOC)

If you own a home with equity, a HELOC can be a flexible and relatively low-cost way to fund your franchise. Interest rates are typically lower than business loans, and you only pay interest on what you draw. The downside: your home serves as collateral, so this approach carries personal financial risk.

Franchisor Financing

Some franchisors offer in-house financing or have preferred lending partners who specialize in financing their specific brand. This can be a faster, simpler path — and franchisors often have incentive to help qualified candidates secure funding. Always ask your franchisor what financing options they offer or recommend.

Partner or Investor Capital

Bringing in a business partner or investor is another option, especially if you're short on liquid capital but have strong operational skills. This can be structured in many ways — silent investors, equity partnerships, or even family investment. Just make sure you have clear legal agreements in place from the start.

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The right funding strategy depends on your personal financial situation, the franchise you're investing in, and your risk tolerance. During our advisor calls, we walk through all of these options and help you identify the best path forward for your specific situation.