Funding for Franchise Owners

What is different about a franchise's costs

Franchisees pay royalties and marketing fees off the top and must meet brand standards for equipment and remodels, which makes costs less flexible.

A franchise gives you a system, but it also gives you obligations. Royalties are usually a percentage of sales, with a marketing fund contribution on top. Both come out whether the month was strong or weak. The franchisor may also require specific equipment, point-of-sale systems, signage and periodic remodels on a set schedule.

That mix matters to your cash flow. When revenue dips, the royalty falls with it, but rent, payroll and loan payments do not. A unit with thin margins can feel a slow month quickly.

Timing is another factor. A required remodel or equipment refresh may arrive on the franchisor's schedule, not yours. The cost can be six figures for some concepts. Owners who keep a funding option prepared can meet those deadlines without draining operating cash.

Because each brand has its own economics, read your franchise disclosure document and your own unit's profit-and-loss statement. Your actual numbers are always better evidence than a brand average.

What ROI Funder can and cannot fund

We place funding for operating franchise units with 6+ months in business and $20,000+ monthly revenue. We do not place initial franchise-purchase or startup loans.

This is the part to get right early. ROI Funder works with businesses that have operated for at least six months and have at least $20,000 in monthly revenue. That fits an open, trading franchise unit.

• We can help with: working capital for an operating unit, equipment for a refresh, funding for a remodel, a second location once the first is operating, and cash flow gaps.
• We do not place: startup loans for a business under six months old, or acquisition loans for buying an existing franchise unit.

If you are buying your first franchise, look to the franchisor's financing resources, SBA loans and your bank. The guide to buying a business with an SBA loan and the SBA loans page explain that route. Come back to us when the unit has six months of trading history.

Payback example: a required equipment refresh (illustrative)

Estimate what the new equipment adds in sales or saves in costs, then compare to the monthly equivalent of the payment.

This is an illustrative example. A franchisee must replace kitchen equipment and a point-of-sale system for $60,000 within 90 days. The upgrade is expected to speed service and add about 6 percent to sales on $90,000 of monthly revenue, with a 25 percent margin on the added sales.

In this example the upgrade roughly pays for itself on added sales alone, but it adds almost no profit. That is common with required spending: it protects your franchise standing rather than boosting income. Include savings, such as lower repair costs, and the effect of being compliant with your agreement. If it is mandatory, the question becomes which structure has the lowest monthly burden. See the equipment payback period calculator and compare offers by total cost.

Products that fit franchise operators

Equipment financing fits required gear, a term loan fits a remodel, and a line of credit fits working capital and slow weeks.

Equipment financing. Kitchen equipment, fitness gear, salon chairs, point-of-sale hardware and vehicles, generally in 2 to 7 days. See equipment financing.

Term loan. Fixed payments for a remodel or build-out, funded in 1 to 5 days. See term loans.

Business line of credit. A reserve for payroll dips and supply costs, drawn and repaid as needed. Funded in 24 to 72 hours.

Working capital. A quick lump sum with funds possible the same business day on approved, complete files.

SBA loans. The lowest cost and slowest option, a strong fit for a planned second unit if you have time to wait.

Check your franchise agreement before you borrow. Some franchisors require approval for financing against assets or for opening a new location, and some have preferred lenders.

How funders view a franchise unit

They review the unit's own bank statements. Six or more months in business, $20,000+ monthly revenue and a 500+ FICO are considered.

Funders judge the unit, not the brand. A strong national name helps a little, but the deposits on your statements carry the file. They look for steady daily or weekly sales deposits, royalty payments that clear, and a balance that covers payroll.

• 3 months of business bank statements for the unit
• 6 or more months in business
• $20,000 or more in monthly revenue
• FICO of 500 or higher considered

Multi-unit owners should apply by unit or entity, and keep each unit's accounts separate. Mixing units confuses reviews and obscures which location is performing.

Some franchise categories, such as food service or fitness, have their own industry pages. Residential construction-related franchises may face restrictions with many funders. ROI Funder cannot promise funding for any file.

Applying

Apply online in a few minutes with a soft credit pull and no obligation, then compare offers.

Start the application and add three months of statements for the unit. ROI Funder checks the file against our 100+ funder network and returns offers with true cost, payback period and monthly-equivalent payments.

Compare them against your required spending schedule. The how it works page shows each step.