The Franchise King®

Use ROBS Franchise Financing To Fund Your New Business

ROBS?

Who the heck is that?

It’s the name of a guy I know who specializes in franchise financing.



Grab This BEFORE You Buy a Franchise

franchise guide

Not After!



robs franchise financing

He’s nice, too.

STOP

I’m kidding.

ROBS isn’t some guy I know.

Instead…

Don’t stop reading now. Especially if you’re serious about buying a franchise this year.

What Are ROBS?

According to the folks at Guidant Financial, ROBS stands for “Rollovers for Business Start-Ups.” It’s a 401k funding program.

Also known as “401k business financing,” ROBS is a franchise business or non-franchise business financing solution that uses a portion of your retirement savings to fund a new or existing business. Now this is important.

There are no withdrawal or tax penalties if you use ROBS financing to fund your business venture.

The way this “Rollover” works, is the retirement funds from your 401(k) are rolled over to your new franchise’s newly created 401(k) account. Once that’s done, it’s moved to your franchise’s checking account. Hence, a “Rollover For Business Start Up.”

Does it sound complicated?

ROBS franchise financing is actually not, especially if a company that specializes in ROBS funding handles everything for you. Like the experts at Guidant, who have helped thousands of people just like you open their franchises.

Again, without penalty.

Advantages Of Using ROBS Franchise Financing: Rollovers For Business Start-Ups

Here are a few advantages of using a ROBS funding program to start a business:

  1. Unlike other methods of accessing retirement funds, like taking an early withdrawal, a ROBS plan doesn’t trigger any early withdrawal penalties or taxes(as long as it’s done properly). That means you can access your retirement funds without incurring a financial penalty.
  2. You have way more control over how your retirement funds are invested. In this case, it means using a portion of your your retirement funds to start a franchise you did due diligence on yourself.
  3. Flexibility. With a ROBS funding plan, you can use your retirement funds for a variety of purposes, including the purchase of stock in your “C” Corporation, working capital, and/or salary and payroll. In a nutshell, you get to use your retirement funds in a way that best meets the needs of your new business.

Are you starting to get more interested in this unique way to finance your franchise business?

Of course there are also a few disadvantages.

Disadvantages Of ROBS Financing 401k Program

  1. Business risk: like any investment, there’s always risk involved. In this case, the risk of your franchise business failing. If that happened, you’d lose some or all of the retirement funds you used.
  2. Legal compliance: Just so you know, ROBS transactions are subject to strict legal requirements. If your business fails to comply with the requirements, there are consequences.
  3. Time-consuming and expensive: the fact is, setting up a ROBS plan-the right way, can be time-consuming. And it’s not cheap to do the necessary things to get your business up and running. That includes creating a “C” Corp. You’ll need to work with an experienced ROBS plan specialist to insure your new business complies with all of the legal requirements the IRS states in their ROBS standards.

Note: I’ve had several of my clients use a ROBS program to fund their franchises.



Get Your Free Franchise Buying Checklist!
Get Your Free Franchise Buying Checklist!
Invalid email address
You'll also get my latest blog posts and my free VIP Franchise Newsletter!


That said, In my 21+ years of doing this, I’ve never had a client tell me it was a mistake to use a portion of their retirement assets to open a franchise business. Never.

Should You Use A ROBS Franchise Financing Plan?

I can’t and won’t answer that for you. Each situation is different.

For example, if you have $200k in your 401K, and you want to use $175,000 of it to fund a franchise, don’t.

Not unless you have several hundred thousand dollars stashed somewhere safe along with a working spouse/partner making decent money.

Conversely, if you have $850k in your 401(k), and you’re thinking of using $200,000 to start a franchise business, and your debt isn’t ridiculously high, you may want to do it.

Just make sure you’ve chosen a high-quality franchise opportunity, and that you’re not expecting to make $150,000 a year right out of the gate.

Because with the right preparation and guidance, using a ROBS financing program can be a terrific way to become your own boss with a franchise.

Get Free ROBS Information Here

Please Share This Article!
2Shares

franchise article written by joel libava
Note: When you buy through links on this website, we may earn an affiliate commission. In addition, I've started to use AI to help me craft better article titles and headings.
The Franchise King® Blog
Get proven franchise research and buying tips, helpful franchising resources, plus the latest franchise news updates and more.
Recommended Reading
Introduction To Franchising
How Much Is A Franchise?
List of SBA Preferred Lenders
What Is The Franchise Fee? How To Buy A Franchise
Best Franchises To Own

Franchise/Business Products!
Top 33 Business Ideas
Starbucks Coffee Franchises
10 Best Franchise Websites
About Franchise Consultants
How To Read A FDD
Questions To Ask Franchisors
Questions To Ask Franchisees Franchise Discovery Day Franchise Reviews
Featured Franchises!

Free Franchise Tools Franchise Compatibility Quiz Net Worth Calculator
joel libava

I'm The Franchise King®, Joel Libava. For 23+ years, I've helped thousands of people avoid bank account emptying mistakes.
If you want to make a smart, informed decision on franchises to own, I can help you, too!
This is Important!
I'm NOT a franchise broker/consultant/coach. I'm a Franchise Ownership Advisor who's not paid sales commissions by franchisors!

You Speak True Words
You speak true words that I knew from your book and our conversations before I began my quest. Do your research, FDD doesn’t tell the whole story, talk to franchisees and the money isn’t everything. Having taken all this into consideration I found my franchise family and am more than happy with it. "

- Wolfgang Willems, Assisting Hands Franchisee, Texas
"The opportunity is often lost by deliberating."
- Publilius Syrus