A franchise brand's Liquid Capital Requirement is the amount of money that a potential franchisee needs to have ready access to in order to open a new location. Each brand is different, but most franchises choose a liquid capital that is somewhat higher than their franchise fee.
Put more simply, liquid capital is how much budget a potential franchisee should have before you're willing to talk to them.
Whatever that number is, you'll let our team know during onboarding (or later, if it changes), and we'll update that number in our system. You'll only receive leads who indicated a liquid capital level equal to or greater than your requirement.
Liquid Capital is a term we use a lot in franchising, so much so that it’s easy to forget that this isn’t really a common word for folks who are new to the industry (hi, potential franchisees!)
If you want to put your finance caps, read this article from our blog about what Liquid Capital is, how to think about it, and its relationship to Net Worth.
Liquid Capital & Net Worth: Why These Metrics Matter In Franchising (And How to Calculate Them!)
Additionally, if you need to help educate potential franchises about liquid capital and net worth, you (and they) might want to check out our free tool called FranCalc. Not everyone necessarily knows what their liquidity is, so now you can check your liquid capital level and net worth to get a better picture of what franchise investment you could be ready for.