Starting a business usually takes serious money. Most franchisors want you to have $100,000 in cash. They also check if you have a net worth of $250,000 or more. Because of these big numbers, many people stop before they try.
Most online videos tell you to buy an existing business. They say you should ask the seller to finance everything. But getting a seller to finance the full price rarely happens.
Luckily, you can use real strategies to get funding. You do not need to empty your savings account to start. As franchise owner, Tariq Johnson shares from his own journey:
"Securing the funding you need is probably one of the most important decisions that you can make in your process of buying a franchise." — Tariq Johnson
Here are four simple ways to buy a franchise with no money down.
When Tariq was 20 years old, he worked at a bank. He made $1,500 a month and lived with his parents. He really wanted to own a franchise. However, he stopped because he lacked the needed cash.
Looking back, he realized he missed a simple truth. He had endless time and energy to work 60 hours a week. He just needed to match with someone who had extra money.
Financial Partner (Capital) + Operating Partner (Labor) = Successful Franchise
Many wealthy people have extra capital to invest. Yet, they lack the time to run daily business tasks. You can bring your hard work, while they bring the money.
This setup happens often with family teams. You see fathers and sons launch home service businesses together. For example, brands like College Hunks Hauling Junk often use this model.
However, you can also partner with outside investors. Tariq notes that busy business owners are open to this setup:
"There are individuals that have the money, but they do not actually want to be the ones operating the business. In that situation, you can just be the operating partner." — Tariq Johnson
To win over a partner, you must show great character. You need a strong track record so they trust you with their money.
You can also ask people to lend you cash instead of taking ownership. In this setup, your supporters become lenders. They do not own a piece of your company.
Private Investor / Friends & Family > Lends Capital
▼ Franchise Business > Meets Liquidity Checks > Pays Back Loan + Interest
You use their cash to meet the franchisor money rules. Then, you pay your lenders back with interest over time.
Taking money from people you know creates real pressure. You must feel confident in your business plan before asking.
According to research from the U.S. Small Business Administration (SBA), lack of money remains the top barrier for new business owners. That makes private borrowing a great choice when banks say no.
As business strategist Tony Robbins often teaches:
"It is not about your resources, it is about your resourcefulness." — Tony Robbins
If you choose this path, always write clear legal contracts. Protect your relationships by putting every detail on paper.
Many people do not know that retirement accounts can fund new businesses. A Self-Directed IRA (SDIRA) lets account holders invest in non-traditional assets. Investors can use these accounts to buy real estate or fund franchises.
Self-Directed IRA (SDIRA)
Option A: Equity Deal Investor receives a share of annual profits
Option B: Loan Promissory note at a fixed interest rate
Suppose an investor has $300,000 sitting in an IRA. They can use an SDIRA manager to lend you that cash. They can also buy equity in your franchise without paying early tax fees.
Tariq explains why this creates a win-win deal:
"You are not having to pay high interest rates and go through the red tape of an SBA loan. You get the loan at a better rate, and the investor gets a great return by believing in you." — Tariq Johnson
Buying an existing franchise location is often easier than building a new one from scratch.
When you start a new location, bank lenders usually want a 20% cash down payment. If the franchise costs $100,000, you must bring $20,000 of your own cash.
However, existing franchises already show steady sales and income. Because of that lower risk, bank lenders often drop the required down payment to just 10%.
You can buy an existing store with zero cash out of pocket by joining two funding sources:
SBA Loan (90%) + Seller Financing (10%) = 100% Funded Deal
Data published by Forbes Finance Council shows that seller financing builds trust. Lenders view seller skin-in-the-game as a strong sign that the business will succeed.
By combining seller financing with a bank loan, you fund 100% of the sale. You step into a working business with no money down.
You can buy a franchise with no money down using four simple methods:
An operating partner manages daily business tasks, hiring, and local work without putting up cash. The financial partner provides the money and holds business equity. The operating partner earns their share through work and management.
Yes. An investor can use a Self-Directed IRA to fund a franchise or lend you startup cash. The money stays inside the tax-protected IRA. All loan returns flow right back into the account without tax penalties.
On an existing resale franchise, SBA lenders often ask for a 10% down payment. If you get the seller to finance that 10%, banks treat that note as your down payment. The bank then lends you the remaining 90%.
Most franchisors require buyers to have $50,000 to $100,000 in liquid cash. They also look for a net worth between $150,000 and $300,000. Bringing in an investor or using private debt helps you meet these rules.
Yes. Resale franchises bring proven income, existing workers, and active customers. Because banks can check past sales records, getting a high-leverage 90% SBA loan is much easier.