26 Field guide entry

Financing overview

Item 7 is an investment estimate. A down payment is a lender's equity injection. SBA 7(a) is a public guarantee program, not a quoted rate.

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 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 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.

Asked in the field

Can you tell me the current 7(a) rate?
No. A consultant should not quote a rate. Rates are set in a lender's commitment, under program rules that change.
Does Item 7 tell me how much I must put down?
No. Item 7 estimates total investment. Equity injection is a separate underwriting number.