Quarrymoor Financial, a small-business funding service in Kingman, Arizona, explains how to fund a franchise purchase in Kingman, AZ: separating the franchise fee, build-out, equipment and opening working capital, what partners review, and the state record a new entity needs. Mohave County, AZ had 147 limited-service restaurant employers in 2023. Partners make credit decisions and set rates and terms.
Four costs, not one
Franchise budgets usually arrive as a single range, but they contain very different costs: the initial franchise fee, the build-out of the space, the equipment and signage the brand requires, and opening working capital to cover payroll and supplies until sales catch up. Each behaves differently, and each fits a different kind of funding.
Food service is one franchise category. Mohave County, AZ had 147 limited-service restaurant employers in 2023, with 2,737 employees, and 28 of them had a ZIP 86401 address (County Business Patterns and ZIP Business Patterns 2023). Not all of these employers are franchises, but the category is one a franchise buyer may consider.
How to finance a franchise: matching cost to funding
| Cost | Funding to compare | Why |
|---|---|---|
| Franchise fee | Term loan or the buyer's own cash | No physical asset to secure |
| Build-out | Term loan | One project, fixed schedule |
| Brand equipment and signage | Equipment financing | Brand gear stands as the security |
| Opening payroll and supplies | A small working capital loan or a revolving line | A gap until sales catch up |
How to get finance for a franchise: what partners review
- The franchise agreement and the brand's required build-out and equipment list
- The buyer's experience in the industry and in management
- A budget for each of the four costs, with bids and quotes
- The signed or draft lease for the franchise site
- How much of the buyer's own cash goes in
- A realistic opening plan and the months before break-even
The right way to finance a franchise is in pieces
A buyer looking for a single ideal way to finance a franchise may want one product. There rarely is one. Equipment financed against the equipment, a term loan for the fee and build-out, and a smaller working capital cushion is a common structure, because each repayment then matches what the money bought. Quarrymoor does not offer SBA loans; buyers interested in SBA-backed programs can find lenders through the SBA Arizona District Office.
An illustration with invented numbers: a quick-service franchise lists a $35,000 fee, $160,000 of build-out, $95,000 of equipment and $40,000 of opening working capital. Splitting the equipment off as its own deal and keeping the working capital cushion separate leaves a smaller term loan for the fee and build-out. These figures are made up.
Form the entity and keep its record current
Franchisors and funding partners both look at the buying entity. If you are forming a new Arizona LLC or corporation for the franchise, do it early and keep its Arizona Corporation Commission record current; the ACC annual report guide explains why that record matters to a funding file.
A franchise purchase in the order it usually happens
- Franchisor approval of the buyer, often after a financial review of its own
- Site selection, and a lease with a contingency tied to funding
- Forming the buying entity and opening its bank account
- Quotes for build-out, the brand's equipment package and signage
- Separate funding requests for equipment, the term portion and opening working capital
- Lease signing, permits and build-out
- Training, inventory and opening
Owners often reverse steps two and five and sign a lease before any funding is lined up. A funding contingency in the lease, or at least a rent start date tied to opening, protects the buyer if a request takes longer or comes back smaller than planned.
How to get finance for a franchise before a site is chosen
Without a site there is no lease, no build-out bid and no equipment list sized to the space, so a partner has little to review. What a buyer can do early is assemble the parts that do not depend on the site: the franchise agreement, a personal financial statement, the cash the buyer will put in, and two or three years of business or personal tax returns. When the site is chosen, the bids slot into a file that is otherwise ready.
For the opening months, a working capital request sized from the brand's own pre-opening budget is easier to explain than a round figure.
Next steps
County figures are on the Kingman, AZ page, and other posts are on the Quarrymoor blog.
By Quarrymoor Financial · Updated
