How much money do I need to buy a franchise?

Hey folks,

Let’s talk numbers.

One of the first questions I get after someone decides they want to buy a franchise is:

“How much money do I need to start?”

It’s a fair question. But like a lot of good questions, the answer is: it depends.

Because franchises vary wildly in their startup costs. Some go for $5K. Some go for seven figures. And the amount you need to invest can vary further depending on how you choose to fund the deal. 

So here’s my breakdown of the hidden math behind franchise startup costs—and how to think about it if you’re just getting started.

First: What does a franchise actually cost?

Most people underestimate this.

They think franchising is for people who don’t have a ton of capital, or they compare it to the “bootstrap from your basement” startup model. And while those kinds of scrappy beginnings work great for certain businesses, they’re not the norm in franchising.

For most legit franchise opportunities, here’s the ballpark:

• Non-brick-and-mortar franchises (where you go to the customer): typically $150K–$500K
  

• Brick-and-mortar franchises (retail location, customers come to you): $200K–$800K+

And sure, you’ll see franchise directories advertise opportunities for $5K or $15K. But in my opinion, if a franchise is worth building a business around, it’s probably going to require at least $150K total investment.

That figure includes more than just the franchise fee. It usually covers:

• Initial equipment or build-out

• Vehicles or leasehold improvements

• Tech systems and setup

• Training

• Working capital

• Pre-launch and ramp-up marketing

You’ll find all this itemized in Item 7 of the Franchise Disclosure Document (FDD). And yes—you should be reading the FDD. Closely. (Here’s how.)

Second: How do you fund it?

The total investment is one number. But most people buying a $300K franchise aren’t putting $300K cash on the table. 

Let’s walk through the three main ways to actually fund these deals:

1. All-cash

This is rare, but it happens. If you’ve got the liquidity and want to avoid debt, you can write the check for the full amount. It’s a baller move, sure. But most buyers aren’t doing this, especially on their first deal.

2. SBA loan

This is by far the most common route.

You’ll typically need to bring 15%–20% of the total project cost in cash, and the SBA loan covers the rest. So on a $300K franchise, you’d need somewhere between $45K–$60K out of pocket.

Keep in mind: The bank is looking at you just as much as the franchise. You’ll need good credit, a reasonable net worth, and a plan for how you’ll operate the business.

3. ROBS (Rollover for Business Startups)

This one’s lesser-known but powerful.

With a ROBS structure, you can take retirement funds from a 401(k) or IRA and invest them into your business—without taking an early withdrawal or paying penalties. It’s a very specific legal structure, so you need the right professionals to do it right. But it’s a solid option if you’re sitting on retirement savings and want to put that capital to work for yourself.

Some buyers even combine ROBS with an SBA loan—using the rollover funds to cover the equity requirement.

What most people miss

The biggest misconception I see is people assuming franchising is plug-and-play and cheap.

It’s not.

Yes, you’re buying a proven system — but the buy-in matters. If you want strong systems, brand equity, support, and a model that can scale, it’s going to cost something.

But when done right, that investment gives you a compressed timeline: you can build in 3–5 years what might otherwise take 10–20 on your own.

The key is understanding what the total picture looks like before you commit.

I’m just scratching the surface here — and I should say, for the record, that none of this is financial advice and you should always do your own research.

Thanks for reading!

Connor

P.S. Looking at the cold hard figures can be exciting and stressful at the same time. I’ve been there.

So if you want guidance, I’ve been around this particular block a few times and I’m happy to help. (Plus, working with me costs you $0.) Book a call with me and my team at connorgroce.com/schedule.

P.P.S. Don’t forget to RSVP for my chats with Michael Girdley and Nick Huber! You’ll learn something, I guarantee it.

Ready for the next step? Here are 3 ways I can help you: