Franchises give business owners a proven system, a trusted product or service, and a set marketing plan. But they also come with costs — and some can be high. First, there’s the franchise fee, which usually falls between $25,000 and $50,000. On top of that, you might have to pay for contractors, legal services, signs, and inventory. Like any business, you also need enough working capital to get started and keep things running.

That’s why franchise owners often look for ways to fund their business. With so much competition for business funding, it’s smart to build a franchise that investors will want to support. Here are five tips to help you create a franchise that attracts funding, plus advice on where to find potential lenders and investors.

Did You Know?
Some lower-cost franchises include fast food chains like McDonald’s and Dunkin’. But even those need a large upfront investment to get started.

How to Make Your Franchise Business Investor-Friendly

Here are five helpful tips to build a franchise business that investors will find attractive:

1. Make Sure You Handle All Legal Matters Properly

Having a good business lawyer is helpful when starting any business. But with a franchise, it’s even more important because of the many rules and legal concerns involved. A franchise attorney can help you understand and deal with these areas:

• Choosing a business structure (like an LLC or corporation)
  
• Understanding taxes and legal rights
  
• Going over your franchise agreement
  
• Reviewing the franchise disclosure paperwork
  
• Dealing with any liability issues
  

Liability is a big concern. It can lead to serious financial loss — even if you didn’t directly cause the issue. This risk can make investors walk away. A lawyer who knows franchise law can help protect your business from these risks and make it safer for investors to get involved.

Tip: Product liability insurance can help cover legal fees, damages, and costs tied to lawsuits about your product.

2. Build a Strong Business and Marketing Plan

Buying a franchise doesn’t mean you can skip business planning. You still need to show that you’ve thought things through.

• Business Plan: Investors will want to see your plans for growth, your goals, and your understanding of the market. You should explain how you’ll follow the franchise model while still building a business that can grow and earn profits.
  
• Marketing Plan: Even though the franchise might give you branding materials and ads, you still need to create your own local marketing plan. Show investors how you’ll bring in and keep customers. A strong plan gives them confidence that your business can succeed.
  

Your marketing and business plans should include clear steps, such as:

• Email campaigns
  
• Social media advertising
  
• Local promotions
  

Always get your franchisor’s approval for any plans to avoid brand or trademark issues.

3. Keep Your Finances in Order

Nothing turns investors away faster than a messy financial system. Even if you’re part of a big, well-known brand, you need to prove that you can handle the money side of things.

“Investors want more than a good idea — they want real numbers and a clear plan,” said Niclas Schlopsna, CEO of spectup, which helps new businesses get investor-ready. He explained that when one of their clients showed customer lifetime value and cost to acquire new customers, investors quickly became interested.

Whether you own one franchise or several, you must keep your books clean. Use accounting software that your franchisor recommends, and make sure it connects with tools like CRM systems. Your system should also give you important reports like profit-and-loss statements and cash flow details quickly and clearly.

FYI: Your choice of bank matters too. Choose one that understands your industry and your investor goals.

4. Use Training and Tools From the Franchisor to Boost Sales

Most franchisors want you to do well, so they offer tools, guidance, and training to help you succeed.

Take full advantage of these resources. You’ll learn what products sell well, how to manage your operations, and how to grow profits faster — all things that investors want to see. If a franchisor doesn’t offer much support, think carefully before joining.

Also, take time to learn on your own. Talk to other franchisees, read industry news, and take classes to build your skills. The more you know, the more confident and capable you’ll appear to investors.

5. Adjust to Market Changes

Just because your franchise starts strong doesn’t mean things won’t change. The market, customer needs, economy, and technology are always shifting.

Watch your key business metrics (KPIs) and keep up with trends. If you notice changes, be ready to act — like adding new products or updating your services. Being flexible and prepared shows investors that you’re serious about staying successful, even when things get tough.

Investors or Bank Loans: Which Is Right for Your Franchise?

In general, investors often back newer businesses, while banks prefer ones that are already running and making steady money. Here’s what each group may look for:

What Investors Want in a New Franchise

Investors usually look at:

• The Pitch: Investors want to hear how your franchise fills a market need and how you plan to succeed. Add details about your location and your plans, even if the franchisor already gives some materials.
  
• Potential ROI: Investors want to earn money. They look for businesses that can grow and make profits quickly. One sign of success is being able to expand into nearby areas.
  
• Equity Offer: Unlike lenders, investors get a share of your business instead of interest. You need to be clear about what share they’ll get and what it’s worth. If you’re vague or ask for too much, they may lose interest. Be realistic and honest about what you’re offering.
  

What Banks Look for When Lending to a Franchise

Banks often focus on:

• Cash Flow: They want to see steady income and will check your financial history, P&L reports, and your franchisor’s records.
  
• Collateral: Lenders may ask for backup security, like property, vehicles, or business equipment, in case you can’t repay the loan.
  
• Experience: Banks want to know that you understand your business and have the experience to run it. A strong business plan and accurate past results help build trust.
  

Tip: Share a short business background with possible investors. Include details about your experience, training, and franchisor support.

Where to Look for Franchise Investors

Finding people who want to invest isn’t too hard. The key is making your franchise business worth investing in. Here are some places to start:

• Online Financing Companies: Sites like BoeFly, Swoop Funding, and ApplePie Capital focus on franchise funding.
  
• Franchisors: Some franchise brands offer financing or help connect you with investors through their own programs or advisors.
  
• Social Media: Use platforms like LinkedIn, Facebook, and X to connect, share your story, and network.
  
• Blogging: A blog is a great way to attract attention. Share your goals, progress, and updates. Read other investor blogs to see what they’re looking for in a business.