Paying for the next franchise location
Updated 16 October 2026
A new franchise location is paid for with the owner's cash, a loan, or both. The amount comes from Item 7 of the brand's Franchise Disclosure Document (FDD), the table of estimated costs to open. The FDD is the document a franchisor gives a buyer before a sale. This page sets out what 431 brands' 2026 FDDs say a location costs and how a lender tests the loan.
Cost to open by category
| Category | Median low end of Item 7 | Median high end of Item 7 |
|---|---|---|
| Indoor recreation | $1,076,150 | $2,516,622 |
| Health and wellness | $478,575 | $824,922 |
| Fitness | $392,400 | $758,822 |
| Pet care | $270,636 | $556,784 |
| Clinical | $207,390 | $481,536 |
| Childcare and education | $178,525 | $340,632 |
| Remodel and improvement | $155,414 | $232,558 |
| Cleaning and restoration | $139,938 | $266,375 |
| Trades and repair | $137,818 | $284,126 |
| Staffing | $131,990 | $247,300 |
| Outdoor and seasonal | $115,285 | $163,257 |
| Senior care | $100,730 | $172,650 |
| Business services | $80,988 | $161,103 |
Across all 428 brands that publish Item 7, the median runs from $164,981 to $327,686. Indoor recreation brands sit highest because they build out large parks.
Sky Zone lists a cost to open of $3,246,160 to $5,683,710. Its average park sold $2,255,992 in 2025, so the cost to open equals 1.44 to 2.52 years of average sales. A Sky Zone owner finances most of that range before the park sells its first ticket.
Debt service coverage
Debt service is the total of loan payments in a year, principal and interest together. The debt service coverage ratio, or DSCR, divides a location's yearly cash profit by its yearly debt service. A DSCR of 1.0 means profit exactly covers the loan payments. Lenders set a minimum ratio above 1.0 in the loan terms.
Camp Bow Wow lists a cost to open from $954,606. Borrowing 70% of that, $668,224, over 10 years at an assumed 10% rate costs $105,968 a year in payments. Camp Bow Wow's FDD gives Total Franchise Owner's Benefit, EBITDA plus the salary owners pay themselves, of 18.5% on average sales of $1,089,860. That is $201,624 a year, a DSCR of 1.9.
The same test at a larger build
A larger cost to open means a larger loan for the same share borrowed. The DSCR then depends on how much profit the location earns against that loan.
The Goddard School lists a cost to open from $1,003,500. Borrowing 70%, $702,450, over 10 years at an assumed 10% rate costs $111,395 a year. Goddard's average mature school earned $546,554 in profit in 2025, a DSCR of 4.9 on that loan. Goddard's Item 7 runs to $8,908,000 at the high end, and a loan at that level carries 8.9 times the payment.
The owner's cash in the deal
A loan for 70% of the cost to open leaves the owner to put in the other 30%, plus the opening reserve. That cash comes before the first loan payment and before the first sale. Lenders ask where it comes from and check that it is in the owner's account.
At the low end of Camp Bow Wow's Item 7, 30% of $954,606 is $286,382 of owner cash. At the low end of Goddard's Item 7, 30% of $1,003,500 is $301,050. Each owner adds the additional-funds line from Item 7 to that amount before signing.
What lenders ask for
- The brand's FDD, with Item 7, Item 19 and Item 20 marked.
- A projection for the new location built from the brand's median, along with the average.
- Two to three years of the owner's existing profit and loss statements, if the owner has a location.
- A personal financial statement and the cash the owner puts in.
- A cash plan for the months before the location covers its own costs.
CertaPro Painters reports an average of $2,102,015 and a median of $1,294,333. A projection built on the CertaPro average starts 62% above the middle business. A lender reading CertaPro's FDD sees both figures, so the projection that uses the median matches what the lender checks.
Cash before break-even
Break-even is the month sales first cover all costs. Before it, the owner funds the gap. Item 7 includes a line for additional funds, the cash the franchisor estimates a new location needs over its first months.
1-800 WATER DAMAGE lists $10,000 to $30,000 of additional funds for the first three months. A 1-800 WATER DAMAGE owner waits for insurance carriers to pay for completed jobs, so wages and materials leave the account first. The additional-funds line is set beside three months of projected wages before the loan amount is fixed.
What this means for an owner
Item 7 sets the amount to finance, and it ranges from a median of $80,988 at the low end for business services to $2,516,622 at the high end for indoor recreation. A lender tests the loan with DSCR, cash profit divided by loan payments. At Camp Bow Wow's figures, a 70% loan at 10% gives a DSCR of 1.9. Projections built on the brand's median match what a lender reads in the FDD. The opening reserve covers the months before break-even.
Check one location
The Franchise Numbers Check is a free tool on this site. It takes one location's figures and sets them against the brand data Averan has published.
Where to next
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