# Qualification Franchisors screen. Lenders screen. They are not using the same numbers, and none of those numbers is a verdict on whether the restaurant will work. Qualification is a set of filters. Mix them up and you will either waste a week on an application that cannot clear underwriting, or talk yourself out of a deal the documents never required. This comparison set does not record brand-stated net-worth or liquidity minimums. Those figures, when a franchisor publishes them, live in that year's FDD, an Item 10 discussion, an application form or a registration-state addendum. If a field here is empty, it stays empty. Do not borrow a number from a portal listing or from a neighboring brand. ## Three different piles of money **Net worth** is assets minus liabilities, including illiquid ones. A paid-off house raises net worth. It does not pay a contractor. Franchisors use net worth as a rough solvency screen and as a personal-guarantee backstop. It is a balance-sheet idea. **Liquidity** (sometimes "liquid capital" or "cash on hand") is what can fund the opening without a fire sale. Cash, listed securities, sometimes a committed unused line. Home equity is not liquidity until it has been drawn. A 401(k) is not liquidity until a rollover or loan has actually produced cash — and those steps have tax and plan rules an accountant must handle. Item 7 is the first test of whether liquidity is even in the neighborhood of the offering. **Credit** (FICO and the rest of a credit file) is a lender's language more than an FDD language. It is a prediction about repayment behavior, not a pile of money. A high score with no cash still cannot fund a build-out. A thick cash position with a damaged file may fail a 7(a) lender even if the franchisor would approve. | Filter | Question it answers | What it does not answer | | --- | --- | --- | | Net worth | Can this person absorb a guarantee and a bad year on paper? | Can they write the checks next quarter? | | Liquidity | Can they fund the opening and the additional-funds period? | Will the shop's sales service the debt? | | Credit | Will a lender underwrite them? | Is the franchise a sound contract? | | Experience | Can they run or hire the labor model? | Do they have the cash? | | Franchisor approval | Does this seller want this buyer in this territory? | Does a bank agree? | Keep the columns separate on the comparison worksheet. A seller who says "you qualify" usually means "you clear our application screen." Ask which screen. ## Item 7 is not a down payment Item 7 estimates the investment to establish and begin operating the offered unit. It is a range, with footnotes, for a stated format. It is not the equity a lender will require, and it is not the cash you must show the franchisor on day one. Worked neighborhood, using disclosed totals only: | Brand | Item 7 range | Format as filed | Source | | --- | --- | --- | --- | | Shah's Halal Food | $197,000–$405,000 | Full-sized restaurant, 1,200–2,000 sq ft | FDD issued 10 April 2024 | | 375° Chicken 'n Fries | $324,100–$521,500 | Single outlet, 800–1,500 sq ft | FDD issued 30 April 2024 | | Mad for Chicken | $320,125–$687,700 | Full restaurant, 2,000–4,000 sq ft | FDD issued 3 May 2024 | | Döner Haus | $359,500–$586,000 | Standing-service imbiss, 700–1,200 sq ft | 2026 Franchise Disclosure Document | | Dog Haus | $357,437–$625,800 | — | May 2024 comparative study of published FDDs | | The Great Greek Mediterranean Grill | $582,014–$1,088,560 | In-line or end-cap, 1,800–2,000 sq ft | FDD issued 17 August 2023 | | GDK | $690,500–$1,123,000 | 1,200–1,400 sq ft, inside a five-outlet minimum | FDD issued 3 September 2024 | | Pepper Lunch | $609,200–$1,471,500 | — | May 2024 comparative study of published FDDs | | The Halal Guys | $461,400–$1,333,500 | — | May 2024 comparative study of published FDDs | A blank square-footage cell stays blank. Wienerschnitzel and bluTaco have no Item 7 total in this dataset; do not invent one to complete the table. GDK's range is per outlet inside a five-outlet minimum. Qualifying for one store's Item 7 is not qualifying for five. The Great Greek low end is built on a discounted franchise fee available only to owners of affiliated brands; a first-time buyer pays the $39,500 fee in that filing. Liquidity conversations that use the low end without reading the footnote are not qualification. They are arithmetic wish. Mad for Chicken separately discloses an express format at $242,500–$466,700 in the same 2024 FDD. If you are qualifying against the express box, say so. If you are qualifying against 2,000–4,000 square feet, do not quote the express total. ## Liquidity versus the additional-funds line The additional-funds row is the filing's estimate of operating cash for a stated initial period — three months in most of the Item 7 worksheets in this set, zero to six months at Great Greek. It is usually the smallest large number in the table and the one buyers skip. GDK's additional funds are $15,000–$20,000 for about three months (FDD issued 3 September 2024). Shah's are $10,000–$30,000 for three months (FDD issued 10 April 2024). Mad for Chicken's are $51,375–$162,000 for three months (FDD issued 3 May 2024). A buyer whose "liquidity" equals the franchise fee plus a construction deposit has not funded the payroll line. Lenders know this. Franchisors who have done this more than once know this. The comparison worksheet should show cash after opening, not only cash to get the keys. bluTaco's May 2024 comparative record discloses no initial franchise fee. That does not disclose an Item 7, a royalty, or a liquidity test. Absence of an entry fee is not a qualification shortcut. ## Credit as a concept, not a cutoff There is no FICO cutoff in this dataset or in the FTC rule. Lenders publish and change overlays; the SBA publishes program rules, not your approval. A consultant who recites a number as if it were federal law is guessing. What to put in the file instead: a current credit report the buyer has actually read, a list of personal guarantees already outstanding, and a conversation with a lender who does restaurant 7(a) or conventional work in the target market. Do that before paying for a trip to discovery day on a deal that cannot be financed in the form being sold. Experience is the fourth filter and also not in this dataset as a brand minimum. Item 15 discloses how much personal participation the agreement requires. Item 11 discloses training hours. Neither is a substitute for having run a crew. Wienerschnitzel's 48 classroom and 480 on-the-job hours (May 2024 comparative study) assume a long in-store runway. bluTaco's 0 classroom and 11.5 on-the-job hours assume something else. Qualification for one is not qualification for the other.
A qualification pass that does not invent numbers - Write three figures from the buyer's own papers: net worth, currently available liquidity, and that a credit file has been pulled. - Write the current FDD's Item 7 high for the actual format, plus the additional-funds period. - If the offering is multi-unit, multiply only what the development agreement actually requires — GDK's five-outlet minimum is a disclosed example in this set. - Ask the franchisor, in writing, where any net-worth or liquidity minimum is stated in the current FDD or application. If they point at a website and not a page, keep asking. - Ask a lender what equity injection they would want against that Item 7, without treating the answer as a rate quote or a commitment. - Leave brand minimums blank on this site's worksheet unless they appear in the filing in front of you.
## Related reading - [What it costs to open](/what-it-costs/) — Item 7 as the size of the problem - [Financing overview](/financing-overview/) — how a lender looks at the same cash - [Single vs multi-unit](/single-vs-multi-unit/) — qualification changes when the minimum is five stores - [Timeline to open](/timeline-to-open/) — when screening happens relative to the FDD - [Comparison worksheet](/comparison-worksheet/) — three money columns, kept separate --- HTML: https://qsrfieldguide.com/qualification/