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How to Buy a Franchise With No Money?

How to Buy a Franchise With No Money?
Donata Tamulionyte

Donata Tamulionyte

Last updated - June 28, 2023

Most business-minded people dream of owning a business and having freedom and financial security. Starting a business is easier said than done. First, lacking finances and bad credit could be the worst stumbling blocks to starting the business. Again, it is known that most new businesses are bound to fail within their initial years. These and more facts are what motivates entrepreneurs to consider franchising.

A franchise system with numerous years in business provides many ready-made solutions that could favor entrepreneurs of all walks. Even so, every business needs capital to start, and even when considering the franchise business, there are financial requirements. Sometimes they can seem too high. The good news for ambitious entrepreneurs is that buying a franchise with no money is possible. 

Can You Buy a Franchise With No Money Down?

Yes, purchasing a franchise with zero funds is possible, but it might not be as easy. Moreover, while there are a couple of options, some may be riskier. Hence, you must do your homework and find the least complicated avenue. 

What Options Are Available for Financing a Franchise?

Financing a franchise can be a significant undertaking, but there are several options available to potential franchisees. Here are some common methods for financing a franchise.

Zero-Down Franchiser

One way is finding a franchiser who offers zero-down financing. Today, unlike in the past, finding one is a daunting task, but a few are still available. If you have decided on a particular brand, find out if it offers financing. Ask them if they provide funding options for willing partners to get started. If they do, you must have a good credit score and a few business investments to demonstrate your commitment to the venture. The few available franchisers might charge high fees and high-interest rates. Do your homework to find a deal that suits your needs. 

Lenders and Banks

Another option is getting a loan from a lender or bank to finance a franchise. This could go well when you have a good credit score and a strong balance in your account. A solid business plan will also help you get loan approval. 


Consider finding an investor willing to pay for your franchise. The hard part here is to convince them what you will do to make your franchise successful. Hence, a strong business idea would make the process less of a hassle. By choosing this option, you should be ready to relinquish a portion of your ownership in the franchise to the investor.

Home Equity Loan

A home-based line of credit or a home equity loan can see you through if you are a homeowner. The value of your property determines the amount of credit or loan. Home equity is the difference between what you owe on the property and its value. For instance, if the value of your home is $1,000,000 and your loan balance is $300,000, your equity is $700,000. 

Most bank institutions will not allow you to take out a loan for the entire equity. When considering a home equity loan to finance your franchise, ensure you do proper research so as not to risk your property in case the business backfires. You need a good debt-to-income ratio and a high credit score to qualify for a home equity loan approval. 

Small Business Administration Loan (SBA)

The US SBA ensures entrepreneurs secure loans from banks cooperating with the program. Therefore, you do not get direct financing. These loans have the lowest interest rates besides the longest return duration than other financial institutions. When SBA backs your financing application, you stand a high chance of getting the loan. Remember, a good credit score is a must. 

How to Choose the Right Franchise for You

Are you ready to settle for a franchise? Research well to understand all aspects of franchising, including the risks involved, benefits, agreements, and different types of contracts. Make sure you are fully clear about the franchise business before taking the next step. From there, you can start narrowing down your choices. Here are a few factors to consider.

Investment in Your Potential

Ensure your prospective franchiser cares about your growth and professional success within the company. It is common for some franchisers to administer tests to determine the ambition and mindset of franchisees.

Strong Support System

It is crucial to buy into an already-established franchise. The knowledge and guidance of your franchiser are instrumental to your success. Take advantage of these tools and use other support systems (owners of different locations) you gain through the franchise.

A Franchiser’s Professionalism

Take note of how the franchiser handles your requests right from your initial inquiries. Do you receive thorough and prompt answers to questions? These contacts are vital as they tell you how the franchiser conducts its business. 

Mutual Expectations

You should be clear about what you expect from your prospective franchiser and what it expects from you. Ensure the deal favors both parties before you sign the contract. Consider this to be a long-term deal. Ensure that the terms are clear and that you are ready for the commitment. 

What Are the Challenges of Running a Franchise?

As successful as they seem, franchisees don’t have an easy path to profit. Here are a few unique sets of challenges that you could face when running a franchise. 

Long Approval Processes

The franchiser and franchisee should work as a team for the business’s success. The partnership has to be the right fit for both parties. Franchise agreements are long-term contracts (10 to 15 years). Getting it right in the first place is critical, and that is why the approval process is often long and intensive. 

High Operating Cost

Aspiring entrepreneurs must be prepared to invest considerable money to get the franchise business off the ground. Besides the upfront and licensing costs, other expenses can reach the seven-figure range. You will be doomed if you do not have other sources of income. 

Different Regulations

There are set rules when operating a franchise in any city. In addition, there are additional regulations when operating in major cities like San Francisco, New York, or Chicago. Fair Workweek laws exist in Oregon, Chicago, IL, Emeryville, CA, New York, NY, Philadelphia, PA, etc. 

How Can You Make Your Franchise Profitable?

Every entrepreneur’s priority is making a profit. How can you supercharge your franchise’s earning capacity?

Stop Discounting

Discounts are a surefire way of bringing in masses of customers continuously. Stop discounting in your franchise business unless you have a transparent pricing, sales, and profit margin strategy. Without a well-thought-out plan, you could be giving away your business.

Start Selling Online

E-commerce can extend your coverage beyond your franchise network and offer your customers an alternative sales channel. If it’s not part of the agreement, do not give your franchise a cut of your online sales. You should also avoid any potential conflict of interest. 

Review Your Costs

Review each cost strategically by asking yourself what each expense adds to your business. Spend money to make money, but remember that some spending brings in more money than others. So do not take the cost aspect for granted, and do not only consider it for tax purposes only.

Study Your Customers

Study your customers and identify the best ones. The best clients are not necessarily those with big purchases but the ones who bring in the most money. Know how to get more of such customers and even ask them for referrals. On the other hand, know from whom you get the least money for the most effort. Do not be afraid to fire them. 


By now, you have grasped a thing or two about franchises and how to buy one without money. You know how critical it is to find a good lender and what it takes to get the financing. Always research to know the best franchise to choose and what to do to cultivate a good relationship with your franchiser throughout the contract period. Learn the challenges of running a franchise and how to arrest the challenges. For instance, if you run out of money, you can raise more online by completing paid surveys at and other means.


What franchises are the most affordable to buy?

With the many affordable franchises, choosing the most affordable depends on your investment goals, location, and industry. Examples include Cruise Planners, whose initial fee is $10,995; Dream Vacations, $9,800; Proforma, $0; Town Money Savers, $0; 360clean, $25,000.

What are some ways to secure financing for a franchise?

A few ways to secure financing for a franchise include franchisee financing, traditional bank loans, SBA loans, personal loans, and crowdfunding.

How can I evaluate if a franchise is worth the investment?

Doing your research to know more about the industry is the first thing on your list. Talk to other franchisees to get invaluable insight into the business, meet franchisers, ask vital questions, and evaluate the financials.

Donata Tamulionyte

Donata Tamulionyte

Community Manager,

Donata is the heart and soul behind the community. As a communication wizard, she brings an exceptional blend of specificity, gentleness, and patience to her role. Donata has a remarkable ability to "read" people just from a few sentences, making her the perfect conversational partner for our users worldwide. When she's not building community connections, you'll find her singing, crafting melodies, and writing. Donata also loves animals and enjoys spending time analyzing their behavior and engaging in training.

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