Brand initial fee (FDD Item 5)
3-6 months of operating expenses
SBA 7(a) Loan
$450K
90% of project cost
Total project cost$500K
Your injection (10%)$50K
Monthly P&I (10yr)$5,580
Typical Franchise Project Cost Breakdown
For a QSR or specialty service franchise, expect roughly this allocation:
- Franchise fee: $25K-$75K (one-time, paid to franchisor)
- Build-out / TI: $150K-$600K (largest line item)
- Equipment / FF&E: $75K-$250K
- Initial inventory: $10K-$50K
- Working capital: $50K-$150K (cover first 3-6 months)
- Lease deposit + first months: $20K-$50K
- Soft costs: $15K-$40K (architect, permits, legal, signage)
How SBA 7(a) Funds It
The 7(a) finances all of these line items in a single loan. The buyer puts in 10% (sometimes less if a portion is in seller standby for an acquired franchise), and the SBA loan covers the rest. Term is typically 10 years for the working capital + equipment portion, with 25-year term available if real estate is included.
SBA Franchise Directory check first. If your brand is listed, lenders can skip the FDD deep dive — faster closing, fewer surprises. See the SBA Franchise Directory guide.