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How to Start a Franchise with No Money

Investing in a franchise can be a smart option for anyone looking to be their own boss by starting a business. But not everyone has the start-up capital required to kick-start that entrepreneurial journey, and make their dream of business ownership a reality.

That doesn’t mean that starting a franchise is off-limits! Just because you may not have thousands of dollars sitting in your bank account ready to invest, doesn’t meaning you can’t start a franchise. In fact, there are several ways to generate capital. Here’s a step-by-step guide to starting a business… even when you don’t have the funds you need right now.


Before you start seriously considering different franchise options, you need to know exactly what you can afford. This means having an excellent understanding of your current finances – including your net worth. Compile a balance sheet that lists all of your assets and liabilities, and figure out what you can realistically invest. That way, you know how much you still need. It’s often worth seeking advice from a financial advisor at this point, so that they can help you determine what you can afford – and what you can’t. Starting a franchise is always going to require a certain amount of risk, but make sure you’re only taking a smart risk – and not over-stretching yourself financially.


Franchise costs vary massively depending on the business and the franchisor. Do your research, and look for franchises that are a realistic fit with your financial situation. OK, so you don’t have half a million dollars to sink into a retail-based franchise – that doesn’t mean that starting a franchise is off the table for you. Service based franchises like Shack Shine are more affordable because there’s no retail rates associated. You can base your business from home, and they’re low inventory, low overhead – meaning a lower initial investment and faster ramp-up time – so that with hard work and determination, you can start making money, and earning back your investment, fast.


There are a number of ways you can go about securing the funds you need to start a franchise. Not all of these will be right for you, so look into each option carefully.

Start saving

It’s an oldie, but a goodie. Yes, you might want to ditch the suit and start creating the life you’ve always wanted NOW – but sometimes, patience isn’t just a virtue, it’s a necessity. Devise and commit to a solid savings plan, and work towards your goal of business ownership. It may be a long road, but you’ll know in your heart if it’s worth it.

Borrow From Yourself

It’s possible to borrow from your retirement savings to start a franchise, through something called Rollover as Business Startups, or ROBS. This allows you to use money from an IRA, 410(k) or 403(b) to pay the initial and/or ongoing costs of a Franchise business. However, while there are generally no penalties or interest, you will incur a tax liability on any money you withdraw from a retirement account. If you are a homeowner, another option is to take out a home equity loan on your property. Before tapping the equity in your home, make sure you appreciate the risks. If you default, the bank can seize your home.

Apply For A Small Business Loan

The Small Business Administration (SBA) offers loans for new businesses in the United States. New businesses and franchises can access SBA-backed loans by applying through their lenders. To qualify you will need a good credit score, and usually around 20-30% of the loan amount as a downpayment. If you are going down this route, it’s a good idea to choose a Franchise that has been registered and approved by the SBA, as you can benefit from a fast application process.

Ask Friends or Family to Invest

Walking up to someone at a BBQ and asking if they’ll lend you $20,000 to start a franchise probably isn’t going to work. Take the time to put together a legitimate sales pitch, laying out your business plan, and return on investment – for example, when you’ll pay them back. If you do secure an investor, ensure you have a contract drawn up by a legal professional, stating the terms of the agreement, and signed by both parties. Everything should be watertight, and everything should be above board.

Find a Business Partner

A problem halved is a problem solved, as the saying goes – and the same is true for an investment. Going into business with someone else means you can split the costs (but also the profits!). It’s also a big undertaking to work with someone day in day out, especially when it comes to agreeing on the big decisions that come with owning a business – so take that into consideration.

A lot to think about, right? Weigh your options carefully, discuss with those closest to you, and consider all angles before making any decisions. Just don’t give up on your dream of business ownership!

Ready to take the leap? Find out more about our franchising opportunities here.

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