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How To Own A Franchise With No Money: Is It Possible?

How to own a franchise with no money
Franchising - July 19, 2022 Written By: Krista Dinsmore

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If you like working for yourself and are driven to succeed, a franchise might be for you

Owning a franchise provides you with brand recognition and an established reputation that can take years to build if you were to start from the ground up. Franchises also offer ongoing support and help ensure you stay competitive. But, to get all of this you generally have to have a large capital investment. 

Checklist: Are You Ready to Own a Hospitality Franchise?

The good news is, there are ways for you to own a franchise with little to no money to invest. Here are some ways you can do it:

  1. Find a franchise with lower initial fees

Franchises charge initial fees to get their franchisees started. This can range anywhere from $10,000 to upwards of $100,000. If you are interested in becoming a franchisee, do your research. Look at different options in the hospitality industry to find franchises that start at the lower end of the scale. This will reduce the amount of money you have to invest. 

If the amount that is needed to start your franchise of choice is still too high, there are some other options. 

  1. Franchisor financing 

Many brands realize that not every entrepreneur is loaded with free capital to get them started. That’s why many offer funding opportunities in the form of franchisor financing. This is a loan provided by the franchisor to help with startup fees. While this option usually requires you to have impeccable credit and some sort of investment to show commitment, it can be a helpful way to get started when you have little capital to spare. 

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  1. Bank loan 

Traditional bank loans are a good option for some entrepreneurs. To qualify for a bank loan, you must meet specific criteria. The criteria you need to meet will depend on the bank, but generally includes a high personal credit score, a credit utilization ratio under 30 percent and a strong history with banks. 

The bank will also look at the franchise that you are wanting to get into to ensure it has a business model that has worked for past franchisees. That means that the better known and more reputable the brand, the more successful you will be with a bank loan. 

  1. Partnerships 

If you don’t have enough capital to start up your franchise, consider partnering with someone who can finance the project. Partners can be anybody – a family member, friend, work colleague, etc. Just remember, entering a partnership means you are sharing control with another person. So be sure it is someone you trust and always have a partnership agreement in place before starting the business together. This will help ensure everyone understands their roles, responsibilities and rights and knows what share of the profit they will receive. 

  1. Home equity loans 

Some franchisees will turn to home equity loans to help get them started with their new business. To take out a home equity loan, you must owe less on your home than it is worth on the market. This difference is the equity you have on your home. 

This option can be riskier as you’re putting your property at stake if the loan defaults. As such, the bank will generally not allow homeowners to take out a loan for the entire equity of their home. 

To help minimize the risk of any financing option, be sure to find a franchise with: 

  • An established brand 
  • Proven success
  • An involved franchisor that offers coaching and training
  • A strong marketing strategy 
  • Little to no competition 
  • A recession-resistant market 
  • No legal issues, such as pending litigation, convictions or known issues with franchisees
  • Goals and requirements that align with your objective 

 

This will help with the approval process and attract more investors, as well as maximize the success of your franchise. 

Why you should consider Sculpture Hospitality as your franchise partner

Sculpture Hospitality was started in 1987 with the goal of helping bars and restaurants maximize their profit potential. Since then, we’ve expanded worldwide with more than 370 successful franchisees who provide expert inventory management solutions for the hospitality sector.

We have a range of investment opportunities from small to large, and we can help you start your own business through:

  • Our proven formula and business model has three key drivers: customer acquisition, customer experience (CX) and retention, marketing and operations.
  • Our coaching and training programs help your business to grow.
  • Our team of digital marketers will create a strong brand presence for your company.
  • Our unmatched industry reaches as the only global inventory service for the hospitality sector.
  • Our innovative and fully-customizable inventory management solutions can be tailor-made for any company you do business with.

If you are interested in starting your own business, contact us today for more information on how franchising with Sculpture Hospitality can set you up for future success. 



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Owning a Sculpture Franchise - The Quick Start Guide

Do you love the bar and restaurant industry, but you’re ready to give up the long hours that come with it? If so, you may be considering buying your own hospitality franchise business.
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