Buying a Company-Owned Franchise Location: Refranchising Deals and How to Finance Them
Many franchisors operate some locations themselves. From time to time, they sell those company-owned units to franchisees, a process known as refranchising. For buyers, this can be an opportunity to acquire an operating location directly from the brand, sometimes in markets where new franchise territories are not available.
Refranchising deals are not the same as buying a unit from another franchisee. The seller is the franchisor, the financial records were produced inside a larger company, and the purchase often comes with new development expectations. This guide explains how to evaluate and finance a purchase when you buy a company-owned franchise location.
For purchases from existing franchisees, see our guide to buying a franchise resale.
Why Franchisors Sell Company-Owned Locations
Franchisors refranchise for many reasons, including:
- Shifting their business model toward franchising rather than operating
- Raising capital for other priorities
- Placing locations with local operators
- Exiting specific markets as an operator
The reason matters. A franchisor selling strong units to grow its franchise base presents a different opportunity than one selling underperforming units. Ask directly why these particular locations are being sold.
How Refranchising Deals Differ
The Seller Is Also Your Franchisor
You are negotiating with the company that will oversee your franchise afterward. That can make approval smoother, but it also means the franchisor sets the terms on both sides of the relationship. Have your own attorney and accountant represent you.
Financials Come From a Larger Organization
Company-owned units often share corporate services such as accounting, marketing, purchasing and management. Their financial statements may include allocated costs or may leave out expenses you will pay as a franchisee, such as royalties and advertising fund contributions. Lenders need a clear picture of what the unit will look like under franchise ownership.
The Unit May Need a New Franchise Agreement
As a franchisee, you will sign a franchise agreement and pay the ongoing fees described in it. Your projections must include those fees, even though the company-owned unit did not pay them.
Development Commitments May Be Attached
Some refranchising deals include obligations to open additional units or complete remodels. Our guide to area development agreement financing explains how to plan for development schedules.
Reviewing Corporate-Store Financials
Ask for and review:
- Unit-level profit and loss statements for recent years
- An explanation of corporate cost allocations
- Labor costs and staffing levels
- Occupancy costs and lease terms
- Equipment age and maintenance history
- Any planned or required capital improvements
Then build a pro forma showing how the unit would perform under your ownership: remove costs that will not continue, add costs you will incur, and add franchise fees. Lenders will want to understand how you moved from the corporate numbers to your projections.
For SBA acquisitions under SOP 50 10 8.1, which applies to SBA loans receiving a loan number on or after October 1, 2026, expect lenders to focus closely on the unit’s actual financial history, so documenting any adjustments carefully is important. See our overview of SBA franchise loan changes for 2026.
Buying Multiple Company-Owned Units
Refranchising often involves groups of locations. Portfolio purchases add complexity:
- Each unit’s performance should be reviewed individually
- Shared management across units must be planned
- Financing may be structured for the whole group or unit by unit
- Larger purchases may trigger additional lender requirements, such as a Quality of Earnings report, which SOP 50 10 8.1 introduces for some SBA change-of-ownership loans
Our guide to multi-unit franchise financing covers financing groups of units.
Financing a Refranchising Purchase
- SBA 7(a) loans for eligible acquisitions, which can include working capital and equipment. See the SBA 7(a) program page.
- Conventional loans, often used by experienced operators and for larger portfolios. See conventional business loans.
- Real estate financing if the purchase includes the property. See franchise real estate financing.
- Seller financing from the franchisor, if offered, subject to your lender’s rules.
Our guide to franchise acquisition loans explains the acquisition financing process in general.
Valuing a Company-Owned Location
The purchase price should reflect how the unit will perform under franchise ownership, after royalties and your actual cost structure. A unit that looked profitable inside the corporation may produce less cash flow once franchise fees are added. Our guide to franchise valuation explains the factors that drive value.
Estimate loan payments with our SBA Loan Calculator and compare them with your pro forma cash flow.
Questions to Ask the Franchisor
- Why are these locations being sold?
- Can you provide unit-level financial statements and explain allocations?
- Are any remodels or equipment replacements required?
- Does the purchase include development obligations?
- Will managers and employees remain?
- What are the lease terms, and will landlords consent to assignment?
- Will you provide transition support?
Frequently Asked Questions
What is refranchising?
Refranchising is when a franchisor sells company-owned locations to franchisees.
Is buying a corporate location easier than buying from a franchisee?
It can simplify approval, but corporate financial statements often require more adjustment, and the franchisor controls both sides of the deal.
Can I use an SBA loan to buy a company-owned franchise location?
SBA financing may be available when the brand, buyer and transaction are eligible.
Why do corporate-store financials need adjustment?
They may include corporate allocations and exclude franchise fees, so they do not show exactly how the unit will perform under franchise ownership.
Final Thoughts
When you buy a company-owned franchise location, the opportunity can be significant, but the analysis requires care. Understand why the franchisor is selling, rebuild the financials as a franchisee would experience them, and plan for any development or remodel obligations before committing.
US Professional Funding provides franchise business acquisition financing for buyers of existing franchise locations, including company-owned units. We can help you evaluate how a refranchising deal may be financed.
