Can I buy a franchise with no money down?

No source checked for this page says a franchise can be bought with nothing down. What the sources do show is that part of the cost can be financed, and that a franchise carries costs beyond the initial fee. Whether you qualify for any loan is the lender’s decision, so treat the points below as questions to take to a bank rather than as promises.

What the federal loan program lists

The guidelines for the Canada Small Business Financing Program, administered by Innovation, Science and Economic Development Canada, list franchise fees among the intangible assets. They also say that if a CSBF loan finances leasehold improvements, computer software, intangible assets or working capital costs, the lender must take security on other business assets, even if those assets are already subject to prior charges. So ask each lender what security it would require from you and from the business.

Costs that do not stop at the fee

The Canadian Franchise Association describes a franchisee paying a fee to the franchisor, typically an initial franchisee fee and ongoing royalties. Ask what the royalties are and when they start. The Association also asks whether you have the capital, including working capital and emergency capital, to get started and to keep earning a living in slower times. If you plan to put in no money of your own, ask where that capital would come from.

Do not pay before you have the disclosure

In Ontario, the Arthur Wishart Act requires the disclosure document to reach you at least 14 days before the earlier of signing the franchise or a related agreement, or paying the franchisor or its associate any consideration relating to the franchise (a deposit is excluded only if it meets the Act’s conditions). That duty is subject to the exemptions in s.5(7), such as some resales by an existing franchisee that are not effected by or through the franchisor. Some other provinces run their own regimes, and not every province has one. Our guide on how much money you need to buy a business looks at the full range of costs.