Franchises give business owners a strong starting point with a proven business model, a recognized product or service, and an established marketing plan. But joining a franchise also comes with a cost — and sometimes a high one. First, there’s the franchise fee, which usually falls between $25,000 and $50,000. Then there are added expenses for contractors, professional services, signage, and inventory. Like with any new business, you’ll also need to raise enough working capital to get the business up and running.

Because of these costs, franchise owners often need to look for funding options. Since the business funding world is very competitive, it’s important to build a franchise business that stands out to investors. Below, you’ll find five helpful tips for creating a franchise business that is attractive to investors, along with information about where to find financial support.

Did You Know?
Some franchises, such as quick-service restaurants like McDonald’s and Dunkin’, are among the most affordable to buy into. However, even these lower-cost options require a major financial commitment to start.

How to Build a Franchise That Investors Want to Support

Here are some tips to help you make your franchise appealing to potential investors.

1. Make Sure All Legal Matters Are Handled

It’s always wise to get legal advice when starting a business. Franchises come with special legal responsibilities, which makes working with a franchise attorney very important.

A franchise attorney can help with:

• Choosing your business structure (like an LLC or C corporation)
  
• Advising you on taxes and legal rights
  
• Reviewing the franchise agreement
  
• Going over the franchise disclosure document
  
• Helping you manage liability issues
  

Liability is a serious matter and can scare off investors. In some cases, businesses have lost millions of dollars due to lawsuits, even if they didn’t create the product involved. For franchise owners with more than one location, liability issues can increase the risk of losing money — which is something investors want to avoid.

A good attorney can guide you in protecting your business from legal problems, which also helps reduce risks for investors.

Tip:
Product liability insurance can help cover costs related to legal cases, such as court fees, settlements, and damage payments.

2. Develop a Strong Business and Marketing Plan

Owning a franchise doesn’t mean you can skip planning. You still need to build thoughtful business and marketing plans to show how you will grow and succeed.

Franchise Business Plan:
Even though you are following the franchisor’s model, you still need to show investors your own business vision, goals for growth, and financial plans. Investors want to see that you understand the business and have a clear plan to make it profitable.

Franchise Marketing Plan:
While your franchisor will provide marketing tools like logos and ad templates, you should also create your own marketing plan. This shows how you plan to attract and keep customers. A strong marketing plan can help investors see your profit potential.

Good business and marketing plans should include ideas like:

• Email campaigns
  
• Social media outreach
  
• Local promotions for nearby customers
  

Make sure your franchisor approves any marketing efforts so you don’t run into branding or legal issues.

3. Keep Your Finances Organized

Investors want to see clean and accurate financial records. Even if you’re working with a successful franchise brand, messy finances can turn investors away.

Niclas Schlopsna, a startup consultant, explains that investors aren’t looking for vague ideas — they want real numbers. A recent client of his had good revenue, but what got investors interested was comparing customer lifetime value to the cost of acquiring each customer.

Whether you have one location or several, it’s important to use trusted accounting software that follows your franchisor’s rules. Your system should also work with your CRM and other business tools. It must be able to quickly produce key financial reports like profit-and-loss statements and cash flow statements.

FYI:
Your relationship with your business bank is also key. Choose a bank that understands franchise businesses and is willing to support your investment plans.

4. Use Franchisor Training and Support to Grow Revenue

Franchisors usually want their franchisees to succeed. That’s why they often offer training, support, and resources to help you get established and grow quickly.

Take full advantage of this support. If a franchisor doesn’t offer good training or guidance, it may be a sign to look elsewhere. The training you receive will teach you which products sell best and how to earn more. All of this helps build your confidence, boost income, and catch the attention of investors.

You should also look beyond the franchisor’s support. Stay updated by reading industry news, networking with other franchisees, and attending training events. This shows you’re serious about running a strong business.

5. Be Ready for Market Changes

Even a good start doesn’t guarantee long-term success. Your franchise may face competition, changes in customer preferences, economic shifts, or new technology.

Stay informed about the market and track your key performance indicators (KPIs). This helps you spot problems early and find new opportunities. For example, you might talk to the franchisor about offering a new product if the market demands it.

Being flexible and responsive shows investors that you’re actively managing the business and planning for the future — not just coasting along. This kind of attitude gives investors more confidence in your leadership.

Understanding the Difference Between Investors and Bank Loans

In most cases, investors prefer working with new businesses, while banks are more likely to lend to companies with a proven history. Both investors and lenders look for certain signs before offering support.

What Investors Look For in a Franchise

Investors often want to understand the full picture before putting money into a franchise. They typically focus on three main areas:

Business Pitch:
Investors want to hear how your franchise will solve a problem in the market. Your franchisor may have sales materials, but you should also provide details specific to your location and customers. Your pitch should show a clear plan for success.

Return on Investment (ROI):
Investors want to make money, so they look for franchises that can quickly become profitable. They’re also interested in how you plan to grow — for example, by opening more locations in nearby areas.

Equity Offer:
Instead of charging interest, investors take a share of your business. You’ll need to decide how much of your business you’re willing to give up. Be realistic and clear about what investors will get in return and how their share will grow over time.

What Banks Look For in Franchise Loans

Banks focus on reducing risk and typically want to see steady income and financial strength. Here’s what they consider:

Cash Flow:
Banks prefer to lend to businesses that bring in consistent money. They’ll check your income, credit history, and financial documents. They might also review the franchisor’s financial strength to estimate your future earnings.

Collateral:
If your business can’t repay the loan, banks want something they can use to recover their money. You may need to offer assets like property, vehicles, or equipment as backup.

Experience:
Banks want to know you can run the business. They may see franchises as less risky than new startups because they can look at how similar franchises have done. Still, they’ll want to see your business plan and how well you understand your specific market.

Tip:
Create a business profile that highlights your background and experience, including any franchisor training you’ve received.

How to Find Investors for Your Franchise

Finding investors isn’t hard, but convincing them to invest is. You need to make sure your franchise is attractive and that the terms you offer make sense. Here are a few ways to connect with potential investors:

• Online financing companies: Several companies focus on franchise funding, such as BoeFly, Swoop Funding, and ApplePie Capital.
  
• Franchisors: Some franchisors offer in-house funding or work with consultants to help new franchisees afford startup costs.
  
• Social media: Sites like LinkedIn are great for networking and pitching your franchise to potential investors. You can also use platforms like Facebook and X (formerly Twitter) to build relationships.
  
• Blogging: Sharing your journey and business goals through a blog can help draw attention from investors. Reading investor blogs can also help you understand what they’re looking for.
  

By following these steps and staying focused on your business goals, you can build a strong franchise that appeals to investors and has the potential to grow over time.