Franchise Glossary
Liquid Capital
What is Liquid Capital in franchising?
Cash or near-cash assets that can be accessed immediately without selling long-term investments or taking on debt, including checking and savings accounts, money market funds, and short-term CDs. When a franchisor states a minimum liquid capital requirement, they are asking how much you can put to work today without liquidating retirement accounts or real estate. Most brands require $50,000–$150,000 in liquid capital depending on the model. This is distinct from net worth, which includes illiquid assets.
What counts as liquid capital for a franchise?
Cash and near-cash you can deploy immediately: checking and savings balances, money market funds, and short-term CDs. Brokerage holdings are sometimes counted at a discount. Home equity and retirement accounts usually are not, because reaching them requires a loan or a rollover structure first.
How much liquid capital do you need to buy a franchise?
Most brands set a minimum between $50,000 and $150,000 depending on the model, and the figure appears in the franchisor's candidate criteria rather than in a fixed section of the FDD. Treat it as a screening threshold, not a budget. The Item 7 range is what actually has to be funded.
Is liquid capital the same as net worth?
No. Liquid capital asks what you can put to work today. Net worth is everything you own minus everything you owe, including illiquid assets like home equity and retirement accounts. Franchisors commonly set both, and meeting one does not mean you meet the other.