Your Guide on How to Buy a Franchise in 2024

Introduction

How do you buy a franchise with little or no money? There are different ways to go about it.

Ownership Challenges

• 100% Ownership It’s going to be harder if you want to own 100% of something without much money. It’s tough to fully own a business with little to no investment.
• Seller Financing One option is to consider seller financing to acquire an existing franchise. However, this usually involves purchasing from a seller facing major issues, which may mean taking over a struggling business.

Alternative Investment Approaches

• Partnership with Investors If you’re a first-time entrepreneur or a skilled operator, you can invest a little money with a franchisee or wealthy investor seeking returns. This allows you to:
  • Own 10%, 20%, or 30% initially
  • Increase your equity as the business performs well
  • Draw a salary from the business
  • Potentially buy out the investor after a few years for 100% ownership
• Friends and Family Leveraging your network for loans or equity investments can make ownership more accessible. Friends and family may be willing to invest, providing easier access to capital.

Franchise Partnership Opportunities

• Chick-fil-A Partnership
  • Investment: $10,000
  • Income: 50% of the income
  • Earnings: Potentially over $300,000 annually as a manager of one or two locations
  • Exit: No benefit from the sale back to Chick-fil-A after 10 years
• Steak and Shake Partnership
  • Investment: $10,000
  • Income: Similar 50% profit structure to Chick-fil-A
  • Performance: Unlike Chick-fil-A, Steak and Shake is seeing unit closures and less growth.

Financing Options

• SBA Loans To acquire an SBA loan, you typically need to put down at least 10% cash. However, you may secure that cash through your network, allowing you to:
  • Sign off on the loan while putting down minimal capital
  • Leverage other people’s money and bank loans to open or acquire a franchise

Conclusion

Buying a franchise with minimal investment is often easier through partnerships, particularly with financially capable individuals. As you achieve specific performance metrics, you can gradually increase your ownership while also drawing a salary, allowing for a more manageable financial situation. This approach provides a way to balance ownership and income without the stress many business owners face.

There are indeed creative methods to own a franchise with very little or even zero money down.