Franchise funding
How an operating franchise unit uses short-term capital, how to size the payment against deposits, and when a cheaper option fits better.
✓ Merchant Fund Express starts with a soft credit pull. Terms depend on your business's revenue and history.
Updated October 21, 2026 · Merchant Fund Express
Franchise working capital is short-term funding for the cash an operating unit needs between paying bills and collecting sales: inventory, payroll gaps and the timing of royalty and advertising-fund debits. Merchant Fund Express reviews about 3 months of business bank statements, counts royalty debits and existing positions as obligations, and sizes a payment the deposits can carry. Amounts run from $25,000 to $5,000,000.
Working capital is for the operating cycle, not for a build-out. In a franchise unit the most common uses are the ones where cash leaves before it comes back:
If the money is for opening a unit you do not yet operate, working capital is the wrong tool. Read existing vs new franchise funding first.
The question a reviewer asks is simple: after the unit pays food or parts, labor, rent, royalties, the advertising fund and every existing payment, how much room is left? The payment on new working capital has to fit inside that room on a normal week, not a record week.
Payments may be daily (business days) or weekly, depending on the product. Daily payments track sales closely but feel heavier on slow days; weekly payments are easier to plan around a payroll calendar. Run your own figures through the payment burden calculator before you apply, and read what deposits count as revenue so transfers between your own accounts are not counted as sales.
A hypothetical franchise unit deposits $95,000 a month in card settlements and cash. After cost of goods, labor, rent, royalty and advertising-fund debits and an existing equipment payment, about $8,500 a month is left.
| Line | Figure |
|---|---|
| Requested amount | $50,000 |
| Total repayment (illustrative) | $63,000 |
| Cost of the capital | $63,000 - $50,000 = $13,000 |
| Weekly payment | $1,500 over 42 weeks ($1,500 x 42 = $63,000) |
| Monthly equivalent | $1,500 x 52 / 12 = $6,500 |
| Burden on deposits | $6,500 / $95,000 = about 6.8% |
| Room left after the payment | $8,500 - $6,500 = $2,000 a month |
Here the payment fits, but only $2,000 a month of cushion remains. One slow month could squeeze payroll. A smaller amount, a longer term or waiting a few weeks would widen that margin.
Figures in this example are illustrations of the arithmetic, not an offer, quote or approval. Real terms depend on the file and the funder.
Compare offers by total dollars repaid, not by the payment size alone. Two numbers matter: the total cost (repayment minus the amount received) and how long you carry the payment. Some structures use a factor rate, so paying early may not reduce the cost; ask before you sign. The offer comparison calculator puts two offers side by side.
Working capital is not always the best answer. Merchant Fund Express would rather you take the right product than the biggest number.
| Option | Fits when | Published requirement | Read next |
|---|---|---|---|
| Line of credit | Recurring, uneven needs (inventory swings, royalty timing) | Tier 1: 3+ years, FICO 650+, $25K/month revenue | Franchise lines of credit |
| Waiting a few weeks | The gap closes on its own when a known deposit lands | None; costs nothing | Your own cash calendar |
| Vendor or distributor terms | Inventory from a distributor that offers net-15 or net-30 | Distributor's own credit review | Ask your distributor rep |
| Working capital (term or revenue-based) | A one-time need with a clear payback inside a season | Tier 2 from 6 months, FICO 600+, $60K revenue | Working capital overview |
No tax returns for a typical first review; full financials usually only above $250,000. The application takes about 5 minutes and starts with a soft credit pull. Merchant Fund Express gives a same-day decision on a complete file, and funding often follows the next business day.
They do not disqualify you. Royalty and advertising-fund debits are read as normal recurring obligations, and payment capacity is sized after them.
Sometimes. It can be a term loan, but it can also be revenue-based financing or a merchant cash advance, which are not loans. The offer documents say which structure you are signing.
Existing positions are counted in the review. Tier 1 allows at most 2 existing positions and Tier 2 up to 2 current advances. A new structure can lower the payment you carry today.
Funding runs from $25,000 to $5,000,000, sized from the deposits and existing obligations of the entity that applies, not from the brand or the franchise agreement.
Yes. Sole proprietors are eligible, and ITIN applicants are accepted. Spanish-speaking support is available.
Merchant Fund Express reviews your location's revenue, deposits and existing payments. Same-day decision on a complete file; funding often the next business day. About five minutes to apply.
