Franchises and Future Loans

searcher profile

November 22, 2021

by a searcher from The University of Chicago - Booth School of Business in Chicago, IL, USA

Hello -- I've been searching for a business to buy for some time now. I've started considering owning a franchise, as a path to eventually buying a "standalone" business (basically, the franchise would allow me to show some kind of relevant experience to lenders on a future business acquisition, while providing some income during the search process, at least after the franchise is up and running). One question -- I know that franchisors tend to ask for personal guarantees. Would that guarantee potentially preclude a future SBA loan for an unrelated business acquisition? Thank you.

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commentor profile
Reply by a searcher
from University of Virginia in Richmond, VA, USA
I think the bigger issue is the personal guarantee on the debt (presumably SBA) that you might have to take out in order to start the Franchise or your general indebtedness as a result of the franchise.
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