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For a McDonalds which is cheaper than a Car Dealership you must have liquid net worth of 5 million dollars to even quilify to buy one. You pay $900,000 for the store and must also agree to develop two new stores in your area (dependant on what they say) in the next two years.
I'll bet for a Car dealership you would need at much liquid capital if not more because of the cost of all the inventory. Yes it's financed but you need to have minimum 1 years operating expenses in cash reserves. The Corporation doesn't want to be taking over franchises because they can't afford to keep it running if they don't sell X number of cars.
Basically you gotta be TOTALLY loaded to open something like that. I do Franchise lending for Canada's largest bank. The terms are set out by the Franchise corporation and all the people are pre-screened before they can even apply to us for the financing. If the corporation says they are worthy, we do some checking but pretty well run it through because they are backed either way with a guarantee. The different ratios and criteria one must meet is crazy. Basically need 4X-6X the cost of the operation in cash to even open the doors (thats after paying to get the place started).
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