To finance a franchise unit in Delaware, OH, owners can split the opening budget: a term loan for the franchise fee and the fixtures and furnishings, an equipment loan for the kitchen or counter package, and a credit line for the months before unit two breaks even. The first unit's results carry the request, and funding partners review it and decide.
Funding a second franchise unit in Delaware, OH: an opening budget split by loan type, how unit one's results support the request, two equipment quotes compared, and the cash gap before unit two breaks even.
Franchise fees, fixtures and opening inventory for unit two
Unit two has the same shopping list as unit one, priced at today's costs. The franchise disclosure document and the franchisor's opening estimate are the place to start, then each line gets a real quote for the site in question.
| Cost | Amount | How it can be paid |
|---|---|---|
| Franchise fee for the second unit | $40,000 | Term loan |
| Fixtures, seating and furnishings for the leased space | $138,000 | Term loan |
| Kitchen and counter equipment package | $92,000 | Equipment loan |
| Opening inventory | $11,500 | Owner cash |
| Signs and menu boards | $8,400 | Owner cash |
| Training and travel | $3,600 | Term loan |
| Total | $293,500 |
In this example $181,600 fits a term loan, $92,000 fits an equipment loan, and $19,900 comes from the owner. Fixtures here means movable items: seating, shelving, display cases and furnishings. Building out the unit's interior (walls, counters, finishes), work on the building shell or the parking area, and a property purchase count as property work and sit outside this site.
For a quick-service restaurant brand the payroll line is large. Limited-service restaurants (NAICS 722513) in Delaware County, OH paid $81.7 million in annual payroll in 2023 and had 4,210 paid employees at 206 employer establishments, about 20.4 per location by our arithmetic (County Business Patterns). A second unit brings a crew of that kind before it brings steady sales.
Using the first unit's results in the request
An owner with a unit already open has something a first-time franchisee lacks: a track record under the same brand. A request for unit two can include:
- Profit and loss statements for unit one, monthly, for the last 24 months.
- Business bank statements that match those deposits.
- Sales and royalty reports sent to the franchisor.
- The franchise agreement or offer for the second location.
- The lease offer for the new space and the fixture and furnishing quotes.
- A list of every loan and lease unit one carries, with payments.
Coverage is the test that ties them together. In this example unit one leaves $14,000 a month after its costs and owner pay, and already pays $3,100 a month on its own loans. Adding the unit-two term loan at $3,109.43 (84 months, an annual rate of 11%) and the equipment loan at $1,995.72 brings debt payments to $8,205.15, which unit one's cash covers 1.71 times before unit two sells anything.
Equipment packages from the franchisor vs outside financing
A franchisor can offer a preferred finance program for its equipment package, and the franchise agreement can require specific models. Outside financing is still an option when the agreement allows it, as long as the package matches the spec. Compare the two in total dollars, not by the monthly figure alone:
| Quote | Annual rate | Monthly payment | All 60 payments |
|---|---|---|---|
| Franchisor's preferred finance program | 12.5% | $2,069.81 | $124,188.60 |
| Outside equipment lender | 10.9% | $1,995.72 | $119,743.20 |
In this example the outside quote costs $74.09 less each month and $4,445.40 less over the full term. The comparison can go the other way with different quotes, so ask each side for the rate, the term, any fees and the payoff terms. Equipment financing from an outside partner can also cover items the franchisor's package leaves out, such as a second reach-in freezer or extra POS stations.
Cash for the opening months before unit two breaks even
A new unit rarely covers its costs in month one. Sales build while payroll, rent, royalties and loan payments start right away:
| Month | Sales | Short of costs by |
|---|---|---|
| Month 1 | $38,000 | $15,600 |
| Month 2 | $43,500 | $10,100 |
| Month 3 | $47,800 | $5,800 |
| Month 4 | $51,200 | $2,400 |
| Month 5 | $55,400 | No gap |
| Month 6 | $57,900 | No gap |
In this example the gaps add to $33,900 over four months, and month 5 is the first without one. A business line of credit sized to that total, with some room left, covers the ramp without draining unit one's operating account. Each draw is paid down as unit two's sales pass its costs.
The restaurant funding page covers kitchen equipment and payroll gaps for Delaware, OH restaurants, and the Thistlewell blog has a separate walk-through of credit line draws. When the budget is ready, call (740) 448-3802 or open the funding request form.
By Thistlewell Business Funding · Updated
