Personal funds criteria for franchises

searcher profile

June 20, 2022

by a searcher from Columbia University - Columbia Business School in New York, NY, USA

Has anyone had success persuading a franchisor to accept outside investor equity in lieu of personal funds?

One deal I’m working on requires a 12.5% of purchase price to come from “personal or retirement funds” but with so much activity in the space driven by independent sponsors, is there a way around this?

- can franchisors be convinced to allow outside investors?
- are there specific structures that might allow this?


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Reply by a searcher
from Escuela de Ingeniería de Antioquia in Medellín, Antioquia, Colombia
The problem with franchises is they are not profitable in real life, only on the spreadsheet. You will have hundreds of limitations and controls that you cannot avoid because you can't rewrite the contract. A franchisee is just another salesperson in a company, hired to operate his business in another location
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