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May 12 2025
OWNERSHIP

Franchise Financing: How to Fund Your Business

Starting a Franchise? Here’s What You Need to Know About Financing

Starting your own franchise can be an exciting adventure. It’s a chance to be your own boss, build something meaningful and tap into the strength of an established brand. But before you dive in, there’s one big question to answer — how are you going to fund it?

If you're looking to open a franchise and you don’t have capital on hand — you’re not out of the game. There are financing options designed to help people just like you get started.

Having a financial plan early in your journey is key. The more you understand your options, the better positioned you’ll be to take action. Let’s break it all down.

General Franchise Financing: The Basics

So, what exactly is franchise financing, and what does it typically cover?

When you invest in a franchise, you’re often responsible for more than just the franchise fee. Here’s what most financing plans need to support:

  • Franchise Fees
  • Equipment or Technology
  • Real Estate or Leasing a Location
  • Working Capital to get you through your first months

Common Franchise Financing Methods

There’s no one-size-fits-all path to funding, but here are some of the most common ways aspiring franchise owners secure capital:

  • SBA Loans: Especially the 7(a) loan program, which is popular with first-time business owners.
  • Traditional Bank Loans: A solid option if you have a strong credit history.
    Franchisor Financing: Some franchise systems offer direct or partner-based financing solutions.
  • 401(k) ROBS (Rollover for Business Startups): Allows you to use retirement savings without early withdrawal penalties.
  • Alternative Online Lenders: These often come with faster approvals, but sometimes higher interest rates.

What Do Lenders Look For?

Every lender has its own criteria, but in general, expect them to review:

  • Your credit score
  • Your business or management experience
  • Your business plan and overall concept

If you don’t meet the qualifications right now, that’s okay. Many entrepreneurs take time to improve credit, save more or refine their business idea before applying again. It’s all part of the process.

Retail Franchise Financing: Challenges & Opportunities

Retail franchises come with their own unique set of financing needs. Here’s what to consider if your franchise includes a storefront or walk-in location.

Common Costs in Retail Franchises

  • Lease agreements and build-out costs: You may need to customize a space to meet brand standards.
  • Inventory: From shelves to supplies, you’ll need upfront stock.
  • Hiring and training staff: Especially important in the early stages.

Opportunities

Retail brands tend to benefit from brand recognition, consumer demand and foot traffic. Because of these traits, some lenders see retail franchises as a lower risk investment.

There may also be local grants or commercial development incentives available — especially in growing communities or revitalized business districts.

Logistics & Shipping Franchise Financing: What to Know

If your franchise is rooted in services like shipping, delivery or warehousing, your financing structure might look a little different.

Key Costs in Logistics & Shipping

  • Technology and systems: From tracking to shipping software.
  • Fleet or vehicle costs: Depending on the scope of service.
  • Space with specific requirements: You may need a location that’s zoned or outfitted for shipping operations.

Why Lenders Like Logistics

Lenders are often drawn to logistics-based franchises because of their steady demand, especially in B2B (business-to-business) markets. The growth of online commerce and local delivery services has only made this sector more attractive.

Still, keep in mind that insurance, compliance and operational requirements can be higher than in other sectors.

How The UPS Store® Franchise Combines the Best of Both Worlds

What makes The UPS Store® franchise unique is that it operates in both retail and logistics spaces. That gives it a level of flexibility — and financing appeal — that’s hard to find elsewhere.

A Hybrid Model Built for More Opportunities

  • Retail storefront presence attracts steady foot traffic and brand visibility
  • Logistics and shipping services meet growing consumer and business demand
  • Access to preferred lender relationships helps streamline the financing process
  • Support for first-time owners with training
  • Adaptable location formats for urban, suburban and even rural communities

Whether you come from a retail background or are drawn to the logistics side of things, The UPS Store® franchise model blends both worlds in a way that’s hard to match.

Closing Thoughts: Financing with Confidence

Financing a franchise doesn’t have to be overwhelming. There are more options than ever, and many franchise owners started exactly where you are — exploring possibilities and building a plan.

Take time to research, talk to financial advisors or franchising experts, and understand what’s available to you. With the right information and preparation, you can find a path that works for your goals and budget.

If you’re curious about The UPS Store® franchise, reach out for resources available to help you take the next step without the pressure.