Friends and Family

Franchisees often turn to friends or family members for assistance with financing a franchise purchase. Financing from interested friends and family can be an easy way for just about anyone to become a franchise owner, regardless of credit or personal savings.

Friends and family financing typically takes one of the following forms:
Gift: When a friend or family member gives a franchisee money to help finance a franchise. The most frequent use of gift financing is from parents to children. Gifts can often be masked as loans, with no formal repayment provisions.

Loan: When a friend or family member loans money to a franchisee to help finance a franchise.

Investment: When a friend or family member gives a franchisee money to help finance a franchise, in exchange for some form of ownership in the franchise or rights to a portion of the profits of the franchise.

Whether the friend or family member involved invests capital in return for a share of ownership or profits, or wants to become more active in the franchise, each party should make their expectations clear in writing. This will help mitigate the risk that a difference of business opinion will affect a personal relationship.