A New Year, A New Reality for Franchise Funding

As the new year begins, franchisors across the country are setting aggressive growth goals.

New franchise development targets.
New markets.
New operators ready to invest.

But there’s one reality the franchise industry can no longer ignore:

The franchise funding model hasn’t evolved at the same pace as franchising itself.

This isn’t a criticism of legacy systems.
It’s a recognition that the franchisee, the economy, and the funding landscape have fundamentally changed.

And in 2026, those changes matter more than ever.

Franchising Has Evolved — Franchise Funding Hasn’t

Over the last decade, franchising has modernized almost every function:

• Franchise marketing is digital and data-driven

• Development funnels are more sophisticated

• Candidate education is stronger

• Brands are more protective of integrity and outcomes

Yet franchise financing is still largely built on assumptions from 15–20 years ago.

Assumptions about:

• how quickly loans can close

• what assets franchisees bring

• reliance on retirement funds and home equity

• rigid underwriting timelines

As those assumptions break down, friction increases — slowing development and frustrating candidates.

Why Franchisors Are Taking Franchise Development In-House

One of the clearest signals of change is the rise of in-house franchise development teams.

This shift isn’t about control — it’s about transparency.

Franchisors are bringing development internal to:

• gain visibility into the franchise funding process

• eliminate inflated commissions

• reduce political funding relationships

• align financing guidance with brand integrity

• ensure franchisees receive accurate, strategic advice

Funding decisions matter too much to remain a black box.

Today’s Franchise Buyer Looks Very Different

Traditional franchise funding models were built for a buyer who:

• held a long-term W-2 job

• had a 401(k) or IRA for ROBS funding

• owned a home with usable equity

• relied on traditional bank lending

That buyer is becoming the exception.

Today:

• Nearly 40% of Americans have no retirement savings

• Homeownership among adults under 35 is under 40%

• The average first-time homebuyer is now 38 years old

• Many homeowners lack meaningful equity due to high purchase prices

This directly impacts SBA loan collateral, ROBS eligibility, and approval timelines.

The candidate pool has changed — but franchise funding structures haven’t.

SBA and ROBS Still Matter — But the Environment Has Changed

There’s no question that SBA loans and ROBS funding remain central to franchise ownership.

They offer:

• long-term stability

• favorable rates

• structured capital for proven brands

But the process has become more complex.

• SBA loans now often take 60–90 days to close

• Documentation requirements have increased

• Credit boxes have tightened

• Collateral expectations haven’t adjusted to modern borrower realities

Legacy SBA and ROBS providers remain essential — but they are being asked to operate in a system that no longer matches today’s pace.

Why Alternative Franchise Lending Has Grown

Alternative franchise financing didn’t rise because SBA stopped working.

It grew because:

• development timelines can’t pause for months

• candidates lack traditional collateral

• working capital gaps are common

• franchisors need predictable momentum

• not every qualified operator fits a single credit box

Alternative lending has become the flexibility layer modern franchise funding requires.

The mistake has been treating it as a last resort rather than a strategic tool.

The Core Problem: Fragmented Franchise Funding Strategies

Today, franchise funding is often siloed:

• Development groups push what they’re compensated on

• SBA teams focus on SBA

• ROBS providers stay narrow

• Alternative lenders offer speed without brand context

No one owns the entire franchise funding strategy.

That fragmentation creates:

• stalled deals

• confused franchisees

• misaligned expectations

• slower unit openings

In a competitive franchise landscape, those inefficiencies compound quickly.

The Future of Franchise Funding: Strategic Funding Menus

The next evolution of franchise financing isn’t about replacing legacy options.

It’s about expanding them.

Modern franchise funding strategies combine:

• SBA loans

• ROBS funding

• alternative lending

• bridge financing

• working capital

• credit-building pathways

• multi-stage funding plans

All aligned under one transparent, brand-aligned approach.

This benefits:

• franchisees (more options, less friction)

• franchisors (visibility and consistency)

• legacy funding partners (relevance and retention)

• development teams (faster conversions)

Why This Matters in the New Year

The franchise brands that scale fastest this year won’t just have strong marketing or operations.

They’ll have a modern franchise funding experience:

• transparent

• flexible

• strategic

• built for today’s entrepreneur

This isn’t disruption for disruption’s sake.

It’s modernization — long overdue.

As this new year begins, franchisors should ask a simple question:

Is our franchise funding model built for yesterday’s buyer — or today’s?

The answer will define the next decade of franchise growth.