If you’ve got that entrepreneurial spirit and want to apply for franchise ownership, understand that there are some franchise requirements you must fulfill. By Shelia Fischer
If you’ve got that entrepreneurial spirit and want to apply for franchise ownership, understand that there are some franchise requirements you must fulfill. Franchisors are looking for people who can learn their system and grow their franchise within brand guidelines.
All parties want this relationship to be successful, that’s why standards are put in place, so that franchisees qualify based on a system of certain expectations. Two franchise requirements that are very important are credit score and net worth.
Franchise Net Worth
Each franchise you encounter wants to ensure you meet their minimum net worth requirement. Showing net worth confirms you’re financially savvy and understand what it takes to make a business grow. The actual amount of net worth required varies by brand.
What comprises net worth? Your assets: cash and cash equivalents, property, personal property, investments and retirement or other savings.
Franchise Credit Score
Credit scores are another tool used to determine eligibility. Franchisors want to see that you have a history of repaying debt and managing your finances. It’s used to determine a candidate’s ability to handle financial matters.
If your credit score is too low but your other qualifications are on target, a franchisor might discuss with you the reasons your score is low.
Once you qualify, you need to pay for your investment. There’s a variety of franchise financing options:
- Direct financing for qualified buyers from the franchisor
- Commercial bank loan
- SBA loan – Type 7(a) loans
- Personal assets – home equity loans, retirement savings plans
- Rollovers as business startup (ROBS) – withdrawing from 401(k)
Attend an Expo for More Info
There’s nothing like meeting franchise brands, and finance and legal experts all in one place, and in person at a franchise expo. MFV Expositions global brands has been hosting premier franchise events for more than 30 years. Attend an expo to learn the latest about the franchising industry.
Sheila Fischer became president of MFV Expositions after a 27-year tenure with MFV. In addition to leading MFV in sales, in 2019, she was awarded the Global Sales Leader Award of Comexposium, MFV’s parent company. That prestigious award is given to one person throughout Comexposium’s global business, which covers over 135 exhibitions in 15 industries in 30 countries.