Financing for franchises
Franchisees finance franchise fees, build-outs and equipment, often to a franchisor’s set standards.
Key points
- Franchisees finance fees, build-outs and equipment to the franchisor’s standards.
- Established franchise brands can make lenders more comfortable.
- Buying an existing franchise location is often easier to finance than starting new.
- Your experience and your liquidity both matter.
How financing works in franchises
Buying a franchise means paying a franchise fee, building out a location to the brand’s standards and buying specified equipment, often before you open. The franchisor’s track record can help, because lenders can look at how other locations perform.
Financing for franchisees covers start-up costs, equipment and, increasingly, the purchase of existing locations from other owners.
Common financing needs
Here’s how businesses in this industry typically match their needs to the right kind of financing.
| What you need | Usually the best fit | Why |
|---|---|---|
| Franchise fee and build-out | Term loans | A lump sum for start-up costs, repaid as the location grows |
| Equipment to brand standards | Equipment financing | Specified equipment financed over its life |
| Buy an existing location | Business acquisition | Take over a location with sales history |
| Opening inventory and working capital | Lines of credit | A buffer for the first months of operation |
How NorthMerit can help
Apply once and we’ll connect you with one financing partner who works with businesses like yours. It’s free, and there’s no obligation.
What lenders look at
Lenders look at the brand’s performance across locations, the franchise agreement, your experience and how much of your own money you’re putting in. Some lenders have experience with specific brands, which can speed things up.
For existing locations, the location’s own sales history becomes the main focus.
Other things partners commonly ask about: franchise fees and build-outs; buying an existing franchise location; equipment to brand standards.
Opening a new franchise
A first-time franchisee opens a quick-service location for $500,000.
How to prepare
Have the franchise disclosure document, the franchise agreement, your personal financial statement and resume, and the build-out and equipment estimates ready.
Common questions
Is NorthMerit a lender?
Does it cost anything to apply?
Who will contact me?
Other industries
The right financing, from the right partner.
Apply once. One financing partner who knows businesses like yours. Free, with no obligation.
