# Financing overview Restaurant franchise deals are usually a stack: buyer's cash, sometimes a landlord contribution, sometimes equipment finance, sometimes a bank loan. The FDD describes the investment and, in Item 10, whether the franchisor itself offers financing. It does not underwrite you. This page is a public-program description and a document-reading note. It is not legal, tax or investment advice, and it is not a loan offer. ## Item 7 versus cash in the deal Item 7 is the franchisor's estimate of what it takes to establish and begin operating the offered unit, in a prescribed table. A lender's **equity injection** (the "down payment" in conversation) is the share of project cost the borrower must fund with cash or injected assets. Those two numbers are related and are not equal. A buyer who treats the Item 7 low as "the loan amount" has skipped construction bids, the additional-funds period, and the lender's own project budget. A buyer who treats the Item 7 high as automatically 100% financeable has skipped equity injection, ineligible costs, and closing fees. Worked comparison using disclosed Item 7 totals: | Brand | Item 7 low | Item 7 high | Additional-funds period | Source | | --- | --- | --- | --- | --- | | Shah's Halal Food | $197,000 | $405,000 | 3 months ($10,000–$30,000) | FDD issued 10 April 2024 | | 375° Chicken 'n Fries | $324,100 | $521,500 | 3 months ($30,000–$60,000) | FDD issued 30 April 2024 | | Mad for Chicken | $320,125 | $687,700 | 3 months ($51,375–$162,000) | FDD issued 3 May 2024 | | The Great Greek Mediterranean Grill | $582,014 | $1,088,560 | 0–6 months ($35,000–$75,000) | FDD issued 17 August 2023 | | GDK | $690,500 | $1,123,000 | 3 months ($15,000–$20,000) | FDD issued 3 September 2024 | GDK's additional-funds line is small relative to the rest of the table. That does not mean a lender will fund a 1,200–1,400 square-foot restaurant through ramp-up on $15,000 of working capital. It means the filing's estimate is that figure. The Great Greek window can run to six months and $75,000. Mad for Chicken's high additional-funds figure is $162,000 for three months in a 2,000–4,000 square-foot full restaurant. Lenders read those footnotes. Buyers should too. Shah's high column of line items sums to $410,000 against a printed total of $405,000 in that 2024 FDD. A lender's spreadsheet will notice. Do not "correct" the filing in the loan package; explain it. The Great Greek low end uses a discounted franchise fee for owners of affiliated brands; a first-time buyer pays $39,500 in that filing. A loan application built on the discounted low without the affiliation is a wrong application. GDK's range is per outlet inside a five-outlet minimum (FDD issued 3 September 2024). Financing one box is not financing the development schedule. Ask the lender which project they are underwriting. Döner Haus's 2026 Franchise Disclosure Document states an Item 7 range of $359,500–$586,000 for a 700–1,200 square-foot standing-service imbiss. That is a disclosed total, not a line-item worksheet in this dataset. Wienerschnitzel and bluTaco have no Item 7 total here. Leave those cells blank rather than estimating a loan size. ## SBA 7(a) as a public program The [7(a) loan program](https://www.sba.gov/funding-programs/loans/7a-loans) is the U.S. Small Business Administration's primary small-business loan program. SBA does not lend the money. It guarantees a portion of a loan made by a participating lender, on terms the program sets and the lender applies. Public points that belong in a desk manual: - You apply through a lender, not by sending a form to Washington. SBA's site points to participating lenders and a lender-match tool. - Program materials describe eligible uses that can include working capital, equipment, furniture, leasehold improvements and, in many structures, acquiring a business. The lender decides whether a particular franchise project fits. - The public maximum loan amount for 7(a) is $5 million. Most single-unit restaurant projects in this brand set sit well below that ceiling on Item 7 figures alone; a five-outlet development is a different conversation. - Eligibility is described in program rules: operating for-profit business, U.S. location, size standards, creditworthiness, ability to repay, and types of ineligible businesses. A franchise is not automatically eligible because it is a franchise. - SBA maintains a [Franchise Directory](https://www.sba.gov/partners/lenders/7a-loan-program) process so lenders can evaluate whether a brand's agreement is compatible with program rules. Directory status is a lender convenience. It is not an endorsement of unit economics and not a substitute for Item 19. A consultant should not quote a rate. 7(a) rates are a function of program maximums, loan size, and the lender's spread. They move when index rates move. A number recited from memory in a sales meeting is not a commitment. If a buyer needs a payment estimate for a model, the accountant uses a range labeled as a sensitivity, or a written quote from a lender — never a figure this publication invents. Item 10 of the FDD discloses whether the franchisor or an affiliate offers financing, and on what terms. That disclosure is not a 7(a) approval. Some franchisors refer buyers to preferred lenders. A referral is an introduction. ## What usually cannot be wished away **Personal guarantees.** Restaurant 7(a) structures typically require them from owners above a stated ownership threshold. The franchise agreement often requires them too. Two guarantees on the same person are normal and are not double-counting in the way buyers hope. **Ineligible or hard-to-finance lines.** Some professional fees, some internal overhead, some pre-opening salaries, and costs already spent may not enter the project budget the way a buyer expects. Item 7's "professional fees" and "additional funds" rows still have to be paid from somewhere. **Working capital.** Lenders want to see cash after opening, not only keys. Compare that instinct to the additional-funds footnotes above. **Multi-unit schedules.** A development agreement with opening dates is a debt-service and construction-capacity problem. GDK's five-outlet minimum is the worked example in this set; do not invent other brands' schedules.
A financing file that stays honest - Build the project cost from bids plus Item 7, not from Item 7 alone. - Keep equity injection, Item 7, and additional funds on three lines. - Read Item 10 for franchisor financing, then ignore it as a complete plan. - Talk to a participating lender about 7(a) or conventional structures without asking a consultant to quote a rate. - Check whether the brand is on SBA's Franchise Directory as a process step, not as a quality score. - If the offering is a development schedule, underwrite the schedule, not the first store's brochure.
## Related reading - [Qualification](/qualification/) — net worth, liquidity and credit as separate filters - [What it costs to open](/what-it-costs/) — how to read the table a lender will also read - [Single vs multi-unit](/single-vs-multi-unit/) — when one loan is not the deal - [Attorney and accountant](/attorney-and-accountant/) — who builds the model the lender sees - [Item 21 financials](/item-21-financials/) — the franchisor's statements are not your loan --- HTML: https://qsrfieldguide.com/financing-overview/