Can a Franchise Owner Get a Merchant Cash Advance?
Yes. Franchise owners qualify the same way other businesses do, based on the location's deposits and balances, and funders often like franchises because the brand and systems are proven. Check your franchise agreement first, since some franchisors restrict liens or require notice before you take outside financing.
What do funders look at for a franchise?
The funder reads the bank statements for your franchise location, just as it would for an independent business. Franchise systems often come with steady card volume, recognizable sales patterns and documented operating procedures, which make a file easier to read. Newer franchise locations get the same scrutiny as any young business.
Why does the franchise agreement matter?
Franchise agreements sometimes include clauses about liens on the business's assets, changes in control or financing that affects the location. A UCC filing from a funder can trigger a requirement to notify the franchisor or get consent. Read the financing and assignment sections, or have your attorney do it, before you sign a merchant agreement.
How do royalties and fees affect the offer?
Franchisees pay royalties and marketing fees, often as a percentage of sales and often by automatic debit. Funders see those payments on your statements and factor them in. They reduce how much new payment the location can carry, so the offer reflects what's left after the franchisor takes its share.
Can owners of several locations get one advance?
If you own several locations under separate entities, each one has its own bank account and its own file. A funder funds one location or several, depending on each file. Moving money between locations to cover a slow one is common, but it shows up as transfers, not revenue, so expect to explain it.
How do you use an advance well in a franchise?
Franchise owners often use advances for a remodel the franchisor requires, a new equipment package they buy outright, inventory for a busy season or a gap while a new location ramps up. Make sure the payment fits the location's cash flow after royalties, not just its gross sales.
Should you check franchisor financing first?
Some franchisors have preferred financing partners or their own programs for remodels and expansion. Compare those terms with an advance before deciding. A franchisor program with a longer term is often the better fit for a large planned project, while an advance fits a quick need or a gap between planned financing.
What about transfers between franchise entities?
When one location covers another, keep a simple record of the transfers. It makes both files easier to read, and it helps your accountant at tax time.
How can Afterfirst help with this?
Call 877-FUND-654 and tell us which brand and how many locations. Send the statements for the location you want to fund. We'll flag anything in a typical franchise agreement worth checking before you sign.
What else do owners ask about this?
- Can I get an MCA for a business I just bought?
- Can I use a merchant cash advance to open a second location?
- Can I get a merchant cash advance with an ITIN instead of a Social Security number?
More short answers on this topic are on the your business and your file FAQ, and the funder fit checker runs the numbers for your own file.
Have a question we didn't answer?
Ask us on the call. Call 877-FUND-654 with any question. We call you back, usually the same business day, and we always talk with you before we shop your file.