9 Ways To Fund A Food Franchise

9 Ways To Fund A Food Franchise
9 Ways To Fund A Food Franchise

There are two ways you can engage with a food franchise concept. You can buy a franchise from the franchisor and start new, or you can buy an existing franchisee out of their existing business. How you fund the purchase is the question which must be answered. Here are 9 ways to fund a food franchise:

1. Cash

Are your pockets full and your bank accounts stuffed? If you have the flexibility and cash flow you may want to throw in an all-cash offer. It is definitely a good way to get a franchisor’s attention in a situation where you are competing with others for the same territory.

2. Loans

Small Business Administration (SBA) loans are the most popular loan people will use to buy a food franchise. Most community banks must submit the loan to the SBA for approval. The key question you must ask a bank is if they are SBA preferred and if they do their own underwriting and approval for the loan. If they are SBA preferred and do the underwriting and approval, it will dramatically speed up the process and allow the bank to be flexible in completing the deal.

3. Investors

There are always investors and angel groups looking for the next big investment. If you are buying into a new and exciting franchise, drumming up interest in investor networks could work well. Negotiating a deal will be the key to partnering with investors. Working with accredited investors is important as they will likely have additional capital available if needed. They could also help in expanding faster if the concept catches on quickly.

4. Crowd Sourcing

There has been an explosion over the last few years in the crowd sourcing industry. The key to any crowd sourcing campaign comes down to planning, strategy, and offering. A strong strategic plan will engage your audience in multiple ways. Also, what are you willing to offer in exchange for an investment? It could be a free beer with a $20 donation or you get to cut to ribbon at the grand opening for a $2,000 donation. Get creative with your offerings and pricing to entice people to participate.

5. Seller Financing

If you buy an existing franchisee out, seller financing is one of the highly preferred methods people use. If it is an existing business, it will speed up the process of the sale. It will also give the buyer some insurance that the seller will stick around for a smooth transition.

6. Retirement Funds

If you were diligent in funding a 401K over the years you now have another way to finance your new business. The first thought many of you may have is why would I do that and pay penalties, taxes or interest? You would do it because you won’t have to. By rolling your 401k into a business purchase you can see many benefits; speed to securing funding, the ability to pay yourself a salary, no need for loans, the business will be funded by pre-taxed earnings, $200,000 per year can be tax deductible retirement savings. These are a few of the many benefits. This is common in the franchise industry and there are existing services available to assist you. It is best to consult with your CPA and/or lawyer to get a full understanding of the processes and rules behind each of these benefits and more.

"Negotiating with another local business that has space for another concept within its current building can be beneficial to both."

7. Store Within A Store

You may see it and not even think about it. You fill up with gas, go inside to pay and grab some fast food from the chain within the station. Negotiating with another local business that has space for another concept within its current building can be beneficial to both. Synergy is the key in this concept and without it the combination may not work. You can cut down rent cost, have immediate foot traffic, and you might even find a partner or investor for current or future business endeavors.

8. Investor Food Credit

Make an offering to investors for a food credit. Convince 15 people to invest $10,000 each and offer back $10,000 in food credit at the restaurant you are opening. If you can make it work you have $150,000 to put towards opening your business. Investors typically want a piece of the action, but you might be able to attract a group who are just excited about the concept or style of food you are bringing to the city.

9. Combination

Get strategic and use a combination of the above mentioned ways to fund your franchise. Perhaps you buy an existing franchise and get some seller financing. It doesn’t prevent you from using a SBA loan or some retirement funds as well. Maybe you start a new franchise and go the store within a store route. You could also combine that with investor or crowdsourced funds. You don’t know if it won’t work unless you ask or try. Food concepts in the franchise world can have a big variance in cost from one brand to another. Requirements will greatly vary from pedigreed franchisor giants to the new franchisor on the block with the new concept. You might need one million dollars in liquid cash just to get reviewed by a franchisor in one case. Then, there will be cases where the franchisor is just looking for someone who has the will and desire to be a franchisee and will do whatever it takes financially to achieve the ability to make the purchase. Remember to do your due diligence to make sure the franchisor is the right fit for you as well.

Global Franchise Meets.

An inspirational new web video series where we meet the business leaders and influencers in International Franchising.

you may be interested in

franchise directory

  • TaxAssist Accountants

    Business & Professional Services, Financial Services, <100K, Featured

  • Cafe2U

    Food & Catering, Coffee, Take-away, <100K, Featured

  • 800 Pizza

    Food & Catering, Fastfood, Pizza, Take-away, Featured

view more
Connect with Linkedin Logo
Global White Logo Click Here
Close button


Any of the information we collect from you may be used in one of the following ways: To personalize your experience (your information helps us to better respond to your individual needs) To improve our website (we continually strive to improve our website offerings based on the information and feedback we receive from you) To improve customer service (your information helps us to more effectively respond to your customer service requests and support needs) To process transactions your information, whether public or private, will not be sold, exchanged, transferred, or given to any other company for any reason whatsoever, without your consent, other than for the express purpose of delivering the purchased product or service requested. To administer a contest, promotion, survey or other site feature To send periodic emails The email address you provide for order processing, will only be used to send you information and updates pertaining to your order. Note: If at any time you would like to unsubscribe from receiving future emails, we include detailed unsubscribe instructions at the bottom of each email.


We implement a variety of security measures to maintain the safety of your personal information when you place an order or enter, submit, or access your personal information We offer the use of a secure server. All supplied sensitive/credit information is transmitted via Secure Socket Layer (SSL) technology and then encrypted into our Payment gateway providers database only to be accessible by those authorized with special access rights to such systems, and are required to keep the information confidential. After a transaction, your private information (credit cards, social security numbers, financials, etc.) will not be stored on our servers.


Yes (Cookies are small files that a site or its service provider transfers to your computers hard drive through your Web browser (if you allow) that enables the sites or service providers systems to recognize your browser and capture and remember certain information. We use cookies to help us remember and process the items in your shopping cart, understand and save your preferences for future visits, keep track of advertisements and compile aggregate data about site traffic and site interaction so that we can offer better site experiences and tools in the future. We may contract with third-party service providers to assist us in better understanding our site visitors. These service providers are not permitted to use the information collected on our behalf except to help us conduct and improve our business.


We do not sell, trade, or otherwise transfer to outside parties your personally identifiable information. This does not include trusted third parties who assist us in operating our website, conducting our business, or servicing you, so long as those parties agree to keep this information confidential. We may also release your information when we believe release is appropriate to comply with the law, enforce our site policies, or protect ours or others rights, property, or safety. However, non-personally identifiable visitor information may be provided to other parties for marketing, advertising, or other uses.


Occasionally, at our discretion, we may include or offer third party products or services on our website. These third party sites have separate and independent privacy policies. We therefore have no responsibility or liability for the content and activities of these linked sites. Nonetheless, we seek to protect the integrity of our site and welcome any feedback about these sites.


We are in compliance with the requirements of COPPA (Childrens Online Privacy Protection Act), we do not collect any information from anyone under 13 years of age. Our website, products and services are all directed to people who are at least 13 years old or older.


This online privacy policy applies only to information collected through our website and not to information collected offline.


Please also visit our Terms and Conditions section establishing the use, disclaimers, and limitations of liability governing the use of our website at globalfranchisemagazine.com/terms-conditions


By using our site, you consent to our online privacy policy.


If we decide to change our privacy policy, we will post those changes on this page


If there are any questions regarding this privacy policy you may contact us using the information below. All correspondence relating to the Website should be sent to: Global Franchise 21/23 Phoenix Court Hawkins Road Colchester Essex CO2 8JY Email: subscriptions@aceville.co.uk