November 17, 2025
Franchise businesses have been around for a while now and they still prove a popular form of investment for those who are looking to help with the expansion of a business.
There are several ways that you can invest in a franchise business, which are all important to know about. From managing your own location to investing passively into publicly traded franchise stocks.
Knowing the ins and out of options available will help you make a decision so with that being said, here are some helpful tips on how to invest your money in franchise businesses this year.
If you’re looking to invest in a franchise directly, you’ve got a number of options. Firstly, you can choose to operate a new franchise. This would mean opening and operating a single-unit or a multi-unit franchise. This can be a brand of your choosing.
There are different types of franchises, from home-based or not-cost models that may require less upfront capital as a result.
Passive ownership is one where you a own a franchise without actually managing it on a day-to-day basis. Instead, you can hire an experienced general manager to run all the operations for you. That helps to earn a passive income while overseeing the company from a strategic viewpoint instead.
You may want to look at purchasing an existing franchise that’s already in the location you want from a current owner. This will often provide an almost immediate revenue stream and a customer base that’s already established.
Funding a franchise for someone else makes you an investor into the franchise, providing capital in exchange for a stake within the business. Again, no active involvement in running of the business, just a slice of the financial pie .
There are a number of indirect investment methods that are open for you to consider. These include:
For those that are looking for a more passive approach, you can always look at buying stock in publicly traded franchisor companies.
These companies often provide high profit margins and reliable earnings as a result of your investment.
There are some opportunities where you can invest smaller amounts through franchise-specific crowdfunding platforms or funds.
So how you finance your investment when it comes to investing in franchise businesses? Well, just like funding any investment opportunity, you’ve got options available.
Such examples of financing your franchise business investment include:
Before you decide to invest in franchise businesses, it’s good to do your research and due diligence to make sure it’s the right choice for you.
Consider the costs that come with running a franchise. It’s not just the initial franchise fee investment. There’s other expenses to consider, from royalties to premise costs and inventory. These should all be factored in to see if the investment is truly worth it.
A business plan is important to create in order to secure financing and evaluate the long-term viability of this opportunity you’re exploring.
It’s always a good idea to speak to existing franchisees so that you’re aware of the true level of commitment required. It’s also helpful to see how they’re doing themselves to understand the success or not so great success, they’re having with the franchise. It’s good to maybe speak to several where you can to get a good ratio of opinions.
It’s important that you choose the role you want and then understand it’s parameters. If you choose a passive role, then you want your time to be invested in tracking it’s performance and making strategic decisions as a result. Some roles may require more involvement, which you’ll want to be prepared for.
Investing your money into franchise businesses is challenging but also a lot of fun, so use these tips figure out what works best for you.
You can invest directly by opening and operating a new franchise, owning one passively with a general manager, purchasing an already established franchise, or by funding a franchise for another individual, taking a stake in the business without active involvement.
Yes, you can invest indirectly by buying stock in publicly traded franchisor companies, which can offer reliable earnings. Another option is to invest smaller sums through franchise-specific crowdfunding platforms or funds.
You have several financing options, including traditional bank loans, which are often more accessible for franchises. You could also use personal funds, retirement plan loans, or small personal loans. Government-backed loans and financing offered directly by some franchisors are also available, though franchisor financing might come with higher interest rates.
Before investing, you should carefully review all associated costs, not just the initial fee, but also ongoing royalties and operational expenses. Create a comprehensive business plan, speak with existing franchisees to gain insights into the commitment required, and clearly define your intended role within the franchise to ensure it matches your expectations. Online Business Startup suggests thorough research is key.
Traditional banks tend to be more receptive to lending for franchise businesses because franchises generally have a higher success rate compared to independent startups. This established track record reduces the perceived risk for lenders.
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