FAQ – Why Do Franchises Want to Know My Net Worth?

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There are multiple answers to this question. 

1) While calculating your net worth (your assets less your liabilities) isn’t all that technical, knowing your net worth indicates that you have carefully considered your financial circumstances as you have searched for a business opportunity.

2) If you are working with a franchise broker or consultant, the fact that the broker has taken time to discuss your net worth with you helps the franchise have confidence that you have spent adequate time with your broker and know what you are getting into.

3) Most businesses, including new franchises, take several months to become profitable, or even create a positive cash flow.  As a result, top franchises want to be sure that you have adequate working capital to sustain yourself during these first critical months.  If you nret worth is substantial, it is possible that you will need less working capital to begin your business.  Franchise executives can use information about your net worth to help you understand your options.

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