How much does the average entrepreneur need when launching a franchise?

Jessica SarterFranchise Finance

Given the uncertainty of the economic climate, many entrepreneurs are turning to franchises when seeking to open new businesses. Franchises offer a degree of security – a nationally known brand tends to perform better than new businesses and entrepreneurs only need to worry about operations and not developing a reputation.

Still, franchises cost a lot of money to build. Entrepreneurs will have to pay a number of startup fees, especially for bigger franchises. How much of their own money should prospective franchisees bring to the table and how much should they borrow? These are two frequently asked questions among entrepreneurs.

"For most startup businesses, it's a good idea to have approximately 20 to 25 percent, maybe 30 percent, to put down and to borrow the rest," Steve Smits, associate administrator for the Small Business Administration, told Entrepreneur magazine. "There are some lenders who will lend more, and there are some lenders who will require more of a down payment."