1851

It&rsquo;s no secret that investing in any type of business&mdash;franchises included&mdash;requires a financial investment. But when it comes to making the leap from being a prospective candidate to being a franchisee, how much working capital do entrepreneurs really need in order to make their dreams of business ownership a reality? 1851 Franchise sat down with franchise sales experts to find out.

According to Glen Snyder, chief development officer for <a href="http://www.greenhomesolutions.com/franchise/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=how-much-working-capital-candidates-need-when-buying-a-franchise-2704245" target="_blank" rel="nofollow" target="_blank">Green Home Solutions</a>, the working capital that franchisees need before signing on the dotted line extends beyond initial startup costs. However, that&rsquo;s something that&rsquo;s often forgotten in the franchising process.

&ldquo;For me, I think one of the most important things that kind of gets overlooked is initial operating costs beyond initial startup costs. Whatever your startup costs are, until your business begins to generate revenue, you need enough capital reserved to keep your business running smoothly,&rdquo; said Snyder. &ldquo;The amount of time it takes to see consistent revenue varies depending on the franchise you invest in&mdash;some brands can start seeing profits quickly, while others take longer to get to that point. But it&rsquo;s important to know that information before signing your franchise agreement so that you can plan for the future accordingly. You need enough capital to run your business properly while ramping up revenue.&rdquo;

That operating capital is what positions franchisees for success beyond the first few months. There&rsquo;s a lot that goes into running a business, and it&rsquo;s essential for local owners to ensure that their locations are properly staffed and equipped even before opening their doors for business. But the specific dollar amount that it costs franchisees to get to that point can vary. That&rsquo;s why Sharon Peterson, director of franchise sales for <a href="https://www.bestinclassfranchise.com/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=how-much-working-capital-candidates-need-when-buying-a-franchise-2704245" target="_blank" rel="nofollow" target="_blank">Best in Class</a>, says that it&rsquo;s important for candidates to be honest when examining their financial situations before deciding to invest.

&ldquo;How much working capital a franchisee needs depends on a combination of their specific situation and the brand that they decide to partner with. If there&rsquo;s a couple, for example, who want to start a business together, and one of them is still working full time while the other focuses solely on their new venture, they might not need to have as much money saved up as an individual owner who is relying on only one income,&rdquo; said Peterson. &ldquo;There are a lot of things for candidates to take into consideration before they determine the amount of working capital that they&rsquo;re comfortable with, from the current assets that they have to what types of bills they&rsquo;re paying on a monthly basis. But what it ultimately comes down to is what makes the most sense for each owner&rsquo;s individual financial situation.&rdquo;

In order for franchisees to determine what working&mdash;and operating&mdash;capital they should reserve for their new business, they need to do their homework. Because each situation has the potential to vary, it&rsquo;s up to candidates to work with their consultants and brands to finalize the right financial plan.

&ldquo;Do your due diligence before entering into a franchise agreement. Make sure that you have supporting documentation and evidence showing that you&rsquo;re capitalized properly&mdash;franchisors need to know that their owners are in a good spot financially to succeed,&rdquo; Snyder said. &ldquo;Having access to working capital is one of the most important things when it comes to launching a franchise. Not only do franchisors need to be confident that their owners have the right resources to be dedicated to their brand going forward, but you&mdash;as an owner&mdash;need to be positioned for long term success.&rdquo;

How Much Working Capital Candidates Need When Buying a Franchise

1851 Franchise

Not only does working capital allow brands to be confident that they’re working with the right local owners, it also enables franchisees to set themselves up for long-term success.  

This brand page has been paid for by 1851. Content within this page that is paid will showcase a Sponsored icon. This means the brand has engaged 1851 FRANCHISE to write the content. Content without the Sponsored Icon is aggregated media placements the brand earned. Questions can be sent to editorial@1851franchise.com

how-much-working-capital-candidates-need-when-buying-a-franchise

HomeTeam Inspection Service

Photo of two HomeTeam inspectors standing together, looking at tablet

HomeTeam Inspection Service Closes 2025 With 10% Revenue Growth, Poised for Stable Winter and Busy Spring

revenue-growth-2025

Dillas Quesadillas

Beyond Fast Casual: How Dillas Primo Quesadillas Is Leading the QSR+ Revolution

beyond-fast-casual-how-dillas-primo-quesadillas-is-leading-the-qsr-revolution

Homewatch CareGivers

How Homewatch CareGivers® Became the Wellness-Forward Home Care Franchise Built on 45 Years of Purposeful Human Interactions

how-homewatch-caregivers-became-the-wellness-forward-home-care-franchise-built-on-45-years-of-purposeful-human-interactions

Keke's Breakfast Cafe

Building a People‑Powered Breakfast Franchise: How Christie Schatz Shapes Culture at Keke’s Breakfast Cafe

kekes-breakfast-cafe-culture-and-brand-values

KidStrong Franchising, LLC

Why KidStrong is Targeting San Diego for Franchise Growth 

why-kidstrong-is-targeting-san-diego-for-franchise-growth

Buying a Franchise Masterclass

 Franchise Opportunities

Get Support Buying a Franchise

How to Buy a Franchise White Paper

How to Buy a Franchise

How to Sell Franchises

How to Grow a Franchise

Find a Franchise Supplier

1851 Franchise Opportunities

Franchisor News

Franchisor Power Rankings

FranCamp Mastermind Summit

Franchise Development Website Builder

Franchise Resources

Website Awards

Power Rankings

About 1851

Advertise on 1851

Contact 1851 Editorial

Terms of Use

1851 Login

GROWTH CLUB LOGIN

facebook

instagram

twitter

linkedin

youtube

California Pizza Kitchen’s Sale Is the Latest in the Era of PE-Backed Turnarounds in Franchising

california-pizza-kitchens-sale-is-the-latest-in-the-era-of-pe-backed-turnarounds-in-franchising

Buying a fitness franchise, people exercising

Boutique vs. Big Box Gym Franchises: Which Offers Best ROI in the $7 Billion Fitness Market?

buy-fitness-franchise-boutique-big-box-comparison

Pieology Pizza Enters Chapter 11 Following Costly Bid To Save Struggling Stores

pieology-pizza-files-chapter-11-bankruptcy

CNBC: McDonald’s Will Assess if Franchisees Are Offering Value for Customers Under New Standards

mcdonalds-franchise-standards-value-metric

How AI Is Transforming Restaurant Operations and Franchises

ai-impact-restaurants-franchises-human-centric-technology

No-H2O Franchise Deep Dive - Costs, Fees, Profit and Data - 1851 Franchise

No-H2O Franchise Costs, Fees, Profit and Data for 2025

no-h2o-franchise-deep-dive

Ellianos Coffee Franchise Costs, Fees, Profit and Data for 2025

ellianos-coffee-franchise-costs-fees-profit-and-data

Christmas Decor Franchise Costs, Fees, Profit and Data for 2025

christmas-decor-franchise-costs-fees-profit-and-data

Newk's Eatery Franchise - Columbus, Mississippi Expansion - 1851 Franchise

Newk’s Eatery Taps Seasoned Beef ‘O’ Brady’s Multi-Unit Operators for New Columbus, Mississippi Expansion

newks-franchise-columbus-ms-patel

Photo of group of dogs standing together in day care facility

Top Pet Boarding and Day Care Franchise Opportunities for 2025

top-pet-boarding-daycare-franchises

Do You Qualify? A Look at the Chick-fil-A Franchise Requirements

do-you-qualify-a-look-at-the-chick-fil-a-franchise-requirements

The Top 15 Pet Wellness and Vet Care Franchises for 2025

top-pet-wellness-franchise-opportunities

The Top 15 Pet Supplies and Retail Franchises for 2025

the-top-15-pet-supplies-and-retail-franchises

The 15 Top Pet Grooming Franchises To Consider for 2025

the-15-top-pet-grooming-franchises-to-consider

image of jerome hanway from right at home Las Cruces, New Mexico 1851 franchise franchisee spotlight

Jerome Hanway Is Building His Right at Home Franchise Around His Mission To Serve

right-at-home-franchise-las-cruces-jerome-hanway

How Much Working Capital Candidates Need When Buying a Franchise

MORE STORIES LIKE THIS