How to Finance a HireQuest Direct Franchise: Payroll-Funded Model
By Chris Cornella
A HireQuest Direct franchise loan looks very different from a loan for a restaurant or retail franchise. HireQuest Direct offices place workers in daily-pay jobs, mostly for construction and light industrial customers, and the franchisor funds temporary payroll and owns the receivables, so the owner’s capital needs center on the office, the team and the ramp-up period.
This article explains the brand’s payroll and receivables model, its SBA Franchise Directory notes and how lenders view a start-up, a conversion or an office purchase.
US Professional Funding is not affiliated with, sponsored by or endorsed by HireQuest Direct; the name is used only to describe the business. Figures from the franchisor’s website, annual report and disclosure document can change, loan programs and terms vary by lender and borrower, and every loan is subject to review and approval. Nothing here is legal, tax or investment advice. Buyers should review the current Franchise Disclosure Document (FDD) and franchise agreement with a franchise attorney and an accountant.
HireQuest Direct Franchise Loan at a Glance
- Franchisor: HireQuest, Inc., headquartered in Goose Creek, South Carolina.
- Concept: on-demand and temporary staffing with daily pay, primarily for construction and light industrial customers.
- Initial franchise fee: the franchisor’s franchising page says there is no initial franchise fee.
- Royalty: 6% to 8% of gross temporary labor sales, depending on sales volume, according to the company’s 2025 annual report.
- Payroll funding: the franchisor says it funds payroll from day one, and its subsidiaries serve as employer of record for temporary employees.
- Receivables: the company finances franchisees’ initial working capital through its ownership of franchisee accounts receivable.
- Typical term: five years for temporary staffing franchise agreements, according to the annual report.
- System size: 413 franchisee-owned offices and one company-owned office in 43 states, D.C. and 14 other countries at year-end 2025, across all of the company’s brands.
- Opening timeline: the franchisor says most offices open within 60 to 90 days of signing.
- SBA Franchise Directory: listed, with four notes covering leases, receivables, a negotiated addendum and lien position.
What Is HireQuest Direct?
HireQuest traces its roots to 1991, when staffing veterans Dan McAnnar and Rick Hermanns opened their first franchised staffing office in Charleston, South Carolina. By 1998 they had become a franchisor in their own right, and in 2013 the company set a goal of 100% franchise ownership. A 2019 merger with a regional staffing company nearly doubled its size, and the company became publicly listed that December.
HireQuest Direct is the company’s daily-work, daily-pay brand, dispatching workers to construction sites, warehouses and plants that need labor on short notice.
System size. At the end of 2025, the company reported 413 franchisee-owned offices and one company-owned office across all of its brands. Of those, 197 belonged to an executive search business that the company divested on January 1, 2026, so the staffing network that remains is smaller than the headline figure. The annual report does not give a separate count for HireQuest Direct.
How lenders view the brand. The franchisor carries staffing’s heaviest cash burden, payroll, which lowers the owner’s capital needs. But the franchisee’s main asset becomes its share of receivables the franchisor owns, which shapes collateral and SBA documentation.
How the Payroll and Receivables Model Works
In an independent staffing agency, the owner pays workers every week, or every day in day labor, and then waits weeks for clients to pay invoices. That gap is the main reason staffing businesses borrow.
HireQuest Direct is set up differently. According to the company’s annual report and franchising page:
- Company subsidiaries serve as the employer of record for temporary employees.
- The company finances franchisees’ initial working capital through its ownership of franchisee accounts receivable, and franchisees gain access to working capital by factoring their receivables through the company.
- Payroll and associated costs are paid by the franchisee out of the franchise receivables.
- In states without a state-run program, franchisees gain access to the company’s workers’ compensation coverage.
- A Risk Management Incentive Program gives royalty credits to franchisees whose workers’ compensation loss ratios stay below set thresholds.
What that means for a loan. A HireQuest Direct franchise loan generally does not need to fund temporary payroll. It funds the costs the franchisee carries directly: the office, in-office staff, recruiting and sales, technology, insurance and an operating reserve until the office’s share of gross margin covers those costs. Buyers should still read the FDD and franchise agreement closely to understand how receivables are settled, how long-aged or uncollectible invoices are handled and when the franchisee’s share is paid.
HireQuest Direct Franchise Costs
Initial franchise fee. The franchising page states that there is no initial franchise fee. Confirm in Item 5 of the current FDD whether any other initial payments apply, such as training or technology setup.
Office space and build-out. A day-labor office typically needs a storefront with a worker check-in area, a dispatch counter and private offices. Build-out is light, but the site must be reachable for workers and close to industrial customers.
Equipment and technology. Expect computers, phones, printers, furniture, signage, security systems and any safety gear the office supplies to workers. Some day-labor operations also use vehicles to transport crews to job sites.
Opening costs and working capital. The franchising page notes that startup costs vary by brand and that the FDD contains the projected initial investment figures. Budget for rent deposits, insurance, licenses, marketing, in-office payroll and an operating reserve.
Total investment. Item 7 of the FDD gives the official estimated range. A HireQuest Direct franchise loan request is usually built around these categories:
- Office lease deposits and rent before opening
- Leasehold improvements and signage
- Furniture, computers and phone systems
- Safety equipment and, where used, vehicles
- Insurance, licenses and permits
- Training and travel
- Grand opening and local sales and marketing
- Additional funds for in-office payroll and overhead during the ramp-up period
Our overview of staffing agency start-up financing explains how lenders size these needs.
Ongoing Fees and How They Affect Your Loan
Royalty. According to the company’s 2025 annual report, HireQuest Direct royalties are 6% to 8% of gross temporary labor sales, depending on sales volume. Because the royalty is based on sales rather than gross margin, an office’s pricing and pay rates have a large effect on what is left to service debt.
Payroll and related costs. Temporary worker wages, payroll taxes and workers’ compensation are paid from the office’s receivables before the franchisee receives its share.
Other fees. Item 6 of the FDD lists any technology, marketing, transfer or renewal fees.
How lenders factor these costs in. Lenders project billed sales, subtract worker pay, payroll burden, the royalty and other franchisor charges, and then subtract office rent and in-office payroll. Debt service must fit inside what remains. Our article on staffing agency loan requirements covers the ratios lenders frequently apply.
Franchisor Requirements for New Owners
The franchisor’s public pages do not list a minimum net worth or liquid capital requirement, so ask the franchisor and confirm in the FDD. The annual report says the company has developed criteria to evaluate and screen prospective franchisees.
- Experience: staffing, sales or operations management experience helps, and the franchisor supports owners with weekly webinars, training materials, one-on-one coaching and ongoing corporate support.
- Office team: in-office personnel are employed by the franchise, not by the franchisor, and many offices hire business development staff and recruiters.
- Territory: a protected territory typically corresponds with the metropolitan statistical area where the office is located, with smaller territories in a few densely populated cities.
Ways to Own a HireQuest Direct Office
Opening a new office. A start-up has the lowest capital needs but the longest ramp-up while the owner builds a customer base, so lenders lean on experience, credit and liquidity.
Converting an independent staffing business. The company says it occasionally lends to franchisees to support conversions or expansion. A converting operator may also need financing to pay off an existing receivables facility.
Buying an existing office. Purchasing an operating office lets a lender underwrite real billings, customer concentration and gross margin. Transfers require franchisor approval. See our page on staffing agency acquisition financing and our guide to buying a franchise resale.
Adding offices. The franchisor says franchisees can own multiple territories and grow by adding locations, adding brands or making acquisitions.
Financing Options for a HireQuest Direct Franchise
SBA 7(a) loans. HireQuest Direct is on the SBA Franchise Directory, and the franchisor’s franchising page mentions an SBA lending pathway for eligible franchisees. An SBA 7(a) loan can fund office costs and working capital for a new office, or the purchase of an existing office, subject to the directory notes below.
SBA 504 loans. The 504 program is built for owner-occupied real estate and long-lived fixed assets. It rarely fits a leased staffing office, but it may apply if an owner buys the building where the office operates.
Conventional term loans. A conventional business loan may suit an experienced multi-office owner buying another territory, especially when the borrower has other collateral.
Equipment financing. Computers, furniture, security systems and vehicles used to transport workers can be financed separately so cash stays available for the ramp-up.
Working capital and lines of credit. Even with payroll funded, an office pays rent, in-office staff and marketing while billings grow. Seasonality adds pressure: the company reports that demand rises in spring, stays high through summer and tapers in fall and winter, with industrial demand peaking in the third quarter. A reserve or line of credit helps bridge slower months. See our staffing agency working capital options.
Seller financing on resales. A selling franchisee may carry part of the price. Any seller note is typically subordinate to the senior loan, and SBA rules may limit its terms. Our article on seller financing and earnouts in staffing acquisitions explains how these pieces fit together.
SBA Loans for HireQuest Direct Franchisees
SBA lending for franchises runs through the SBA Franchise Directory, which lists brands whose franchise documents have been reviewed for SBA eligibility. A listing does not approve any borrower; each loan is still underwritten on its own merits. HireQuest Direct is listed, and its entry carries four notes that every SBA lender must follow.
Note 1: leases and real estate. When the real estate where the franchise business is located will secure the SBA-guaranteed loan, the Collateral Assignment of Lease may not be executed. In plain English, if the borrower owns and pledges the office property, the franchisor’s lease assignment document should not be signed. For a leased office, this note has little effect.
Note 2: a security interest in receivables. The lender must perfect a security interest in the franchisee’s portion of the franchisor’s accounts receivable, as described in the SBA Negotiated Addendum. Because the franchisor owns the receivables, the franchisee’s main financial asset is its share of them. This note requires the lender to file on that share so the loan is properly secured.
Note 3: the SBA Negotiated Addendum. The lender must obtain the SBA Negotiated Addendum, which the franchisor provides. Ask for it early so the lender’s attorney can review it.
Note 4: lien position. The lender must obtain the correct lien position on all collateral as required by the SBA’s standard operating procedures. Expect the lender to review existing liens and intercreditor arrangements carefully, especially in conversions where a prior receivables lender may have filed.
Loan size and tips. The SBA 7(a) program maximum is currently $5 million, though program rules can change. Bring the FDD, the franchise agreement, the negotiated addendum, a business plan and personal financial documents. Our SBA loan calculator can help with early payment estimates, which are for planning only and are not an offer or approval.
How Lenders Evaluate a HireQuest Direct Deal
Personal credit and financial history. Lenders review credit, tax returns and a personal financial statement, and require personal guarantees.
Net worth and liquidity. Lenders want cash beyond the equity injection to carry the office through a slow season.
Industry and management experience. Staffing, construction, logistics or industrial sales experience counts heavily, because an office’s results depend on winning and keeping customers and recruiting reliable workers.
Business plan and projections. A credible plan models billed hours, bill rates and pay rates, the royalty on gross sales, workers’ compensation costs, seasonality and the hiring of recruiters and sales staff.
The FDD and franchise agreement. Lenders look closely at the five-year typical term, renewal conditions, transfer rules, territory rights and how receivables are settled. Read our article on how lenders read a Franchise Disclosure Document.
Site and lease. Lenders review lease length, renewal options and the location’s fit for workers and customers.
For acquisitions, historical financials. Expect to provide the office’s settlement statements, customer lists and concentration, gross margin trends and workers’ compensation history.
Workers’ Compensation and Risk Management
Workers’ compensation is one of the largest costs in day-labor staffing because construction and industrial work carries higher injury risk. HireQuest Direct franchisees in most states gain access to the company’s coverage, and the Risk Management Incentive Program rewards offices with low loss ratios through royalty credits.
For lenders, an office’s safety record directly affects cash flow, so buyers should review claims history and budget for safety training.
Multi-Unit Growth and Development
The franchisor says franchisees can own multiple territories and grow by adding locations, adding brands or acquiring other businesses. Because each protected territory usually matches a metropolitan area, growth often means entering a neighboring market.
Financing a second or third office. Once the first office has a track record, lenders can underwrite its cash flow together with the new location. Learn more about staffing agency expansion financing.
Real-World Scenarios
A construction manager opening a first office. A former construction superintendent opens an office in a growing metro area. An SBA 7(a) loan funds the lease, furniture, technology and a working capital reserve, while the franchisor funds temporary payroll.
An independent operator converting. The owner of a small day-labor business joins the system. The lender pays off an existing receivables facility, coordinates lien releases and perfects a security interest in the franchisee’s share of receivables as the directory requires.
A buyer acquiring an established office. A buyer purchases an office from a retiring franchisee. The lender reviews customer concentration and workers’ compensation history, and the seller carries a small subordinate note.
Common Mistakes to Avoid
- Assuming no franchise fee means no need for working capital
- Projecting from gross margin while forgetting the royalty is based on gross sales
- Ignoring spring-to-winter seasonality in cash flow projections
- Overlooking how aged or uncollectible receivables affect the franchisee’s share
- Starting the SBA process without the franchisor’s negotiated addendum
- Leaving existing liens unresolved in a conversion
- Underestimating the cost of a poor safety record
For more pitfalls in this industry, read the staffing agency loan mistakes that cost owners the most.
Next Steps to Finance Your HireQuest Direct Franchise
Step 1: Request the FDD. Review Items 5, 6, 7, 10, 12, 17 and 19 and the receivables provisions with a franchise attorney and an accountant.
Step 2: Confirm the franchisor’s requirements. Ask about any net worth or liquidity thresholds and the territory you would receive.
Step 3: Build your projections. Model billed sales, pay rates, the royalty, workers’ compensation and seasonality.
Step 4: Talk with a financing specialist. Learn how SBA lenders handle the directory notes before you sign.
Step 5: Gather documents. Collect tax returns, a personal financial statement, the FDD, the franchise agreement and the SBA Negotiated Addendum.
Step 6: Apply and coordinate. Align the closing with the franchisor’s onboarding and your opening date.
HireQuest Direct Franchise Loan FAQs
How much does it cost to open a HireQuest Direct franchise?
The franchisor says there is no initial franchise fee and that startup costs vary by brand. The official estimated initial investment range is in Item 7 of the current FDD.
What royalty does HireQuest Direct charge?
According to the company’s 2025 annual report, 6% to 8% of gross temporary labor sales, depending on sales volume.
Who pays the temporary workers?
The franchisor says it funds payroll from day one, and its subsidiaries are the employer of record for temporary employees. Payroll and associated costs are paid out of the franchise receivables.
How much liquid capital or net worth do I need?
The franchisor’s public pages do not publish minimums. Ask the franchisor directly and plan for an equity injection plus a reserve.
Is HireQuest Direct SBA eligible?
Yes. HireQuest Direct is on the SBA Franchise Directory, with notes covering receivables, a negotiated addendum, lien position and leases. Confirm current status with your lender.
Does the franchisor offer financing?
The company says it occasionally lends to franchisees to support conversions or expansion. Review Item 10 of the FDD for current terms.
Can I buy an existing HireQuest Direct office?
Yes, with franchisor approval. Lenders underwrite the office’s actual billings, margins and customer mix.
Can a first-time business owner qualify?
Yes, if the franchisor approves the candidate. Lenders weigh sales and management experience, credit, liquidity and a realistic plan.
How long is the franchise term?
The company’s annual report says the typical term for its temporary staffing franchise agreements is five years. Check Item 17 for renewal terms.
Does the FDD include financial performance information?
Check Item 19 of the current FDD. Results vary by office and are not a promise of future performance.
Final Thoughts
A HireQuest Direct franchise loan is usually smaller than a typical franchise loan because the franchisor funds payroll and holds the receivables. The trade-off is a more specialized SBA process, with a security interest in the franchisee’s share of receivables and a negotiated addendum. Buyers who plan for seasonality and keep a reserve give themselves the best chance at a smooth closing.
US Professional Funding helps franchise buyers and owners finance start-ups, acquisitions, conversions and expansions. Learn more about our franchise financing and staffing agency financing programs.
