Money is one of the greatest barriers — and one of the greatest drivers — for entrepreneurs looking to open their own franchise. While some low-cost franchises can be funded with personal savings, a credit card, or a combination of both, many opportunities will require outside financing. The good news? There are more franchise funding options available today than ever before.
Before we dive into the different loans, grants, and financing options, let’s look at the costs you’ll need to cover when you buy your first franchise.
Franchise Funding 101: Costs to Consider
Like any new business, there are one-time and recurring costs to cover as you start and grow. With a franchise, many of these come in the form of clearly defined fees, which is actually an advantage, since you can plan your finances with precision from day one.
Franchise Fees
Most franchises charge an upfront franchise fee that can range from a few thousand to hundreds of thousands of dollars, depending on the brand. This fee typically covers startup essentials like training, your initial website build, and early operational support. It may be paid in a lump sum or in installments, and in some cases, there’s room to negotiate the schedule with the franchisor. A franchise attorney can help you understand your options.
Royalties
Royalties are an ongoing fee, typically a percentage of gross revenue, paid weekly or monthly. This is the franchisor’s ongoing compensation for the systems, brand, and support they provide.
Advertising & Marketing Fees
One of the biggest advantages of buying a franchise is stepping into an established brand. Franchisors invest heavily in national and regional marketing — and in exchange, franchisees contribute a monthly advertising fee, usually calculated as a percentage of revenue.
Other Startup and Operating Costs May Include:
- Architectural drawings and contractor fees
- Equipment, furniture, and fixtures
- Leasehold improvements and signage
- Opening inventory and supplies
- Insurance and permits/licenses
- Software and technology
- Real estate and occupancy costs
- Vehicle (for service-based franchises)
- Working capital reserves
- Training and travel
- Freight and sales tax
All applicable costs should be outlined in the Franchise Disclosure Document (FDD).
Key Financial Questions to Ask Before Investing
According to franchise industry experts, there are 11 critical financial questions every prospective franchisee should answer before signing on the dotted line:
- What are the total estimated costs to open the business?
- How will I finance these initial costs?
- How and when will I repay any loans?
- How does this business generate revenue, and what drives sales?
- How long will it take to reach positive cash flow once open?
- What are the typical ongoing expenses and fees?
- What’s my contingency plan if growth is slower than expected?
- What will the business be worth in three, five, and 10 years?
- What additional capital will the business require over time?
- Are my financial expectations consistent with what existing franchisees experience?
- Will the return on my total investment compare favorably to other opportunities?
The FDD is your primary resource for answering many of these. Items 5, 6, and 7 cover initial fees, ongoing fees, and total estimated investment. Item 19 — the Financial Performance Representation — provides data on actual unit-level performance, though not all franchisors include profitability figures. You’ll need to factor in labor, rent, royalties, ad fees, and other expenses to determine true profitability for your market.
How Much Will You Need?
The franchise industry offers options at nearly every price point. According to the International Franchise Association’s 2026 Franchising Economic Outlook, the number of franchise establishments in the U.S. was projected to grow by more than 12,000 units in 2026 alone — a sign of the sector’s continued strength.
Investment ranges vary widely by industry:
- Service-based franchises (cleaning, staffing, senior care) often have lower startup costs since they require minimal physical infrastructure.
- Food and beverage franchises typically require mid-to-high investment due to buildout, equipment, and inventory.
- Hospitality and lodging franchises can require several million dollars in total investment.
Once you’ve narrowed down your industry and target brands, dig into the FDD for specific cost estimates. Keep in mind that FDD figures are often system-wide averages — your actual costs will depend on local real estate, labor, and market conditions.
Beyond startup costs, plan to maintain a cash cushion covering at least 12 months of personal living expenses. This gives you a financial runway if your business ramps up more slowly than projected. Also, ask franchisors about available discounts — many offer reduced fees for military veterans, women, and minority business owners.
Where to Find Franchise Financing
The Franchisor
Some franchisors offer direct financial assistance — waived or discounted fees, deferred payment schedules, or referrals to preferred lenders. Check Section 10 of the FDD for details on any franchisor-provided financing.
SBA Loans
SBA loans — backed by the U.S. Small Business Administration and issued by participating banks — remain one of the most popular franchise funding vehicles. Loans up to $5 million are available, and the SBA expedites processing for loans tied to franchises on its approved registry. For smaller needs ($150,000 or less), streamlined “low-doc” SBA loans offer faster turnaround with less paperwork. Be sure to stay up-to-date on latest SBA Guidelines.
Retirement Account Rollovers (ROBS)
Many aspiring franchisees don’t realize they can invest retirement savings into a business without triggering taxes or early withdrawal penalties. Through a structure called Rollovers as Business Start-Ups (ROBS), eligible retirement funds — IRAs, 401(k)s, 403(b)s — can be deployed directly into a franchise. To qualify, you generally need at least $50,000 in eligible retirement accounts. ROBS funds can also be combined with a spouse’s or partner’s retirement savings, or paired with traditional loans for larger investments.
Portfolio / Securities-Backed Loans
If you hold mutual funds or other investment securities, you may be able to borrow against their value without liquidating the portfolio. Because the loan is secured by the portfolio itself, interest rates are typically lower than unsecured alternatives. The key risk: if your portfolio loses value, your losses are compounded by the outstanding loan balance.
Unsecured Business Loans
Unsecured loans require no collateral and can fund in as little as a few weeks — making them a strong option when speed matters. Banks, credit unions, and specialty lenders all offer these products. The better your credit score, the more favorable the terms.
Equipment Leasing
For franchises with significant equipment needs — vehicles, commercial kitchen appliances, technology — leasing can reduce upfront capital requirements and provide more predictable monthly cash flow than an outright purchase.
Angel Investors
Angel investors provide capital in exchange for an ownership stake and often an active role in the business. This can be a double-edged sword: you gain both funds and experienced guidance, but you also give up a degree of control. Choose this path only if you’re comfortable with a true partnership.
Spotlight: Benetrends Financial — The Franchise Funding Authority
When it comes to franchise financing, few names carry more weight than Benetrends Financial. Founded in 1983, Benetrends has spent more than 40 years helping entrepreneurs fund their business dreams and has empowered more than 30,000 franchise owners in the process.
Benetrends is the company that pioneered ROBS funding, launching their flagship Rainmaker Plan® nearly four decades ago. Today, that program has evolved into the ROBS+® Plan, an advanced structure that not only allows entrepreneurs to use retirement funds tax-deferred and penalty-free, but also provides a more sophisticated corporate framework for wealth protection, tax efficiency, and long-term growth.
But Benetrends is far more than a ROBS provider. As a full-service franchise funding partner, their suite of solutions includes:
- ROBS+® (Rainmaker Plan®) — Use your retirement savings to fund your franchise with no loans, no debt, and no tax penalties
- SBA Loans — Access to a wide lender network, with one of the industry’s highest loan approval rates (97%)
- Unsecured Funding — Fast, flexible financing for lower-cost franchises with minimal paperwork
- QuickStart Loan — Benetrends’ proprietary loan product, featuring in-house underwriting, quick approvals, and streamlined processing
- Equipment & Fleet Financing — Purpose-built for service-based franchises with significant vehicle or equipment needs
- Securities-Backed Lines of Credit — Leverage your investment portfolio without liquidating it
- Combination Funding Strategies — Mix and match options like ROBS + SBA to maximize capital while minimizing risk
As the preferred vendor and partner of the International Franchise Association (IFA) for IRA/401(k) rollover financing, Benetrends brings unmatched credibility to the franchise funding space. Their team of 80+ experts works with both first-time franchisees and multi-unit operators pursuing aggressive growth strategies.
What sets Benetrends apart isn’t just their breadth of products — it’s their approach. Their process is genuinely consultative: they present all available options, including combinations that might not involve Benetrends at all, because their focus is on long-term client success rather than a single transaction.
Ready to explore your options? Connect with a Benetrends funding consultant for a free, no-obligation consultation at benetrends.com.
How to Apply for Franchise Financing
Regardless of which funding source you pursue, lenders and funding partners will typically want to review:
- Credit history — A track record of responsible borrowing that signals your reliability as a borrower
- Personal financial statements — A full picture of your current assets, liabilities, income, and savings
- A business plan — How you intend to use the funds, and evidence that the franchise model is a sound investment
One advantage of buying a franchise over starting an independent business from scratch: lenders respond more favorably to proven business models with established brand recognition. This can meaningfully improve your chances of securing favorable financing terms.
Finding a Franchise That Fits Your Budget
There is a franchise for every budget — and the best way to find yours is to start with research, get pre-qualified for funding, and talk to franchisees who are already living the experience.
We at Franchise Business Review are committed to helping prospective franchisees find the best opportunities available, rated by the people who know best: the franchisees themselves. Learn about how we work and why our awards lists should be top of mind when researching franchises.
[Contact us for more information, or request a complimentary franchise funding consultation with Benetrends Financial.]
