Your Guide to Starting a Franchise
Buying a franchise gives you a brand and a playbook—but the numbers still decide the outcome. What will it cost to open? How long until you break even? What’s the smartest way to fund it? This guide explains the money side in plain English so you can move forward with confidence.
What to Consider
Before You Spend a Dollar, Dig Into the Basics:
Know the Numbers
Read the Franchise Disclosure Document (FDD). Look for the total startup cost, ongoing fees (like royalties and marketing), and any performance data the brand provides. Then talk to current franchisees to reality-check ramp time, typical payroll, marketing that actually works, and any “surprise” expenses.
Decide Your Role
Will you run the business day to day, or hire managers? Owner-operators and semi-absentee owners budget differently—labor, oversight, and payback timelines change with your involvement.
Pick the Right Place
Territory and location drive revenue; your lease drives costs. Pay attention to visibility, traffic, competition, and the fine print in your lease (base rent, increases, shared building costs, and any personal guarantees).
Plan for the Long Game
Aim for a cushion of 10–20% on top of your project budget. If training, permits, or buildout take longer, you’ll be glad you have it. Think ahead about renewals, transfers, and what expansion could look like later.
Your Financial Checklist
Understand All of the Potential Costs of Your Franchise:
Franchise fee and training travel
Site selection, architect, permits, legal and CPA
Lease and utility deposits; insurance binders
Buildout/renovation, signage, furniture, fixtures
Equipment, POS/technology, software subscriptions
Opening inventory/supplies and launch marketing
Hiring, payroll, and training wages
Insurance (general liability, workers’ comp, property, cyber if needed)
Vehicles (if the concept requires them)
Working capital for months 3–6+ (include your own pay if needed)
Contingency of 10–20% for surprises
Interest reserve if loan payments start before you have sales
For Lenders, Prepare:
- Personal financial statement
- 2–3 years of tax returns
- Credit report
- Resume
- A clear business plan with a monthly budget for 12–24 months (sales, expenses, and cash flow)
- Vendor quotes and a timeline
- A draft lease or LOI
- Proof the franchisor has approved you
- Insurance quotes
Sanity checks to run:
- Breakeven: what monthly sales cover all bills?
- Debt comfort: many lenders like a Debt Service Coverage Ratio around 1.25x (you make at least $1.25 for every $1 of loan payment).
- Downside plan: what if sales are slower, or payroll comes in higher? Build that into your cushion.
Tools & Resources
Think of These as Your Guardrails:
Monthly Plan (pro forma)
A simple spreadsheet that lays out sales, royalties, payroll, inventory, rent, loan payments, and taxes—month by month.
13-Week Cash Flow
Short-term, week-by-week look at money in vs. money out. This helps you manage tight spots.
Quick Calculators
Breakeven and “can I afford this loan?” checks. A small change—like rent 7% higher—shouldn’t sink the plan.
Advisors You Can Trust
A CPA for taxes and entity setup; an attorney for your lease and franchise agreement.
Your Funding Options
How We Can Help
At Eagle Bank, we start by listening. Tell us about your concept, timeline, and comfort with risk. We’ll help you shape a funding plan and set up day-to-day banking that fits how your franchise runs:
- SBA lending options for buildout, equipment, and working capital
- Business checking that keeps operations simple
- Treasury & cash management to streamline payments, collections, and cash flow
- Digital banking so you can manage everything from anywhere
We’ll review your projections with you, talk through breakeven and loan comfort, and share practical ways to build a cushion—like negotiating free rent during buildout, phasing hiring, or sequencing purchases so cash lasts longer when it matters most.
