Franchise Glossary
Working Capital
What is Working Capital in franchising?
The cash reserved to fund day-to-day operations during the ramp-up period, before the business generates enough revenue to cover its own costs. Working capital is one of the most frequently underestimated line items in franchise budgets. FDD Item 7 discloses an estimated range, but the actual amount you need depends on how long your category typically takes to reach break-even, your local market, and how conservatively you want to operate. Most advisors recommend funding at least six months of projected operating expenses before opening.