Can you buy a franchise if you don’t have any money? My question for you is: Can you buy ANYTHING in life if you don’t have any money?
I’ve seen a lot of videos on YouTube trying to address the topic of buying a franchise “no money down” and I’d like to dispel some myths.
A franchise is an investment, and sadly, it TAKES money to MAKE money. That said, you may be “worth” more than you think. And, there ARE financing options available to purchase a franchise business.
Most franchise owners are looking for two things they’re looking for LIQUID ASSETS and NET WORTH. So when we talk about liquid assets, it’s a little bit different from how the rest of the world might define a liquid asset. On my net worth statement, liquidity includes:
• Cash
• Stocks and bonds
• Equity in your 401(k)
• Equity in real estate and other investments
We might also be including life insurance (cash value), but then we’re subtracting any liabilities, so any debt that you have against any assets. And that would calculate your approximate net worth.
So why do franchisors need to know how liquid you are and what your net worth is? Well, because even if you are going to get a bank loan, the bank will typically require the first 20% or 30% in cash from you. But as I just said, CASH doesn’t have to mean CASH. It could also be your 401(k).
The ROBS program, which stands for Rollover for Business Startup, allows you to use your 401(k) without creating a taxable event for the purposes of purchasing your franchise business.
See my recent video explaining the ROBS program in detail.
Ultimately, whether it’s a $100,000 investment, or a $10,000 investment, the franchisor wants to know that you’re financially stable.
But how do you know what you can afford? You work with someone like The Daly Coach, an experienced Franchise Consultant who can teach you what your money buys.
It is critically important that you have proper capitalization for the business, but also for your mindset. Entering into a franchise investment that you barely qualify for, even if the bank will loan you the money, or you could scrape up enough credit cards to put it all on a credit card… It’s not a good and wise investment and it’s not something that The Daly Coach would ever really support. I’d rather coach you on what your money buys and prepare you, and then send you on your way to get those assets together and then come back to me in a year or two year or five years. when you feel you are ready to make the move.