Can You Buy a Franchise with No Capital?

Prospective franchisees can’t expect to buy a franchise business without any capital. Depending on the franchise, the initial costs to start the business can range anywhere from $10,000 to $1,000,000. Additionally, franchisors often want to see that candidates have a certain level of capital in the bank before approving them.

Still, there are ways candidates can free up funds or look for financing. For one, many franchisors offer some type of financing to help franchisees generate capital because they want to add another location to their system. A franchisor may offer low-interest loans or assistance in finding funding from trusted sources.

Franchises are also often prime candidates for SBA loans. The SBA provides a guarantee on loans provided by banks, credit unions and other lenders, known as intermediaries. With a hefty percentage of each loan backed by the SBA, franchisees and other small business owners often have an easier time being approved. There are several SBA loan options, most of which offer flexible repayment plans that are ideal for small business owners.

Prospective franchisees may also consider taking on an investment partner to help collectively pool resources in order to buy a franchise, and subsequently divide the work in whatever way they see fit.