Franchise Glossary
Net Worth Requirement
What is Net Worth Requirement in franchising?
A minimum total asset threshold (assets minus liabilities) that a franchisor requires of prospective franchisees, disclosed in FDD Item 5. A $500,000 net worth requirement does not mean $500,000 in cash. It means the total value of what you own (home equity, retirement accounts, investments, business interests) minus what you owe must reach that threshold. Net worth requirements ensure franchisees have enough financial depth to weather slow periods.