When you begin your entrepreneurial journey to become a franchise owner, there are several factors to consider before you can make an informed decision on purchasing one. First and foremost, you’ll have to choose from thousands of individual concepts, looking for a franchise opportunity that best aligns with your goals, lifestyle, and especially your financial tolerance. Financial tolerance is sort of a fancy way to describe how much you can afford to spend as you investigate the right franchise opportunity. While initial franchise fees explain what you’ll pay upfront to buy a particular franchise, there’s also another financial consideration that franchisors require you to meet. That’s known as your net worth.
Every franchisor requires potential owners to meet a minimum financial threshold to qualify as a new franchisee. Much like the initial franchise fees, net worth requirements also vary widely among franchise brands. We’re going to define what net worth is, along with some helpful advice on how you can increase your own financial tolerance by building it up.
What is Your Net Worth?
Simply put, your net worth is the quantitative value of all your financial assets, minus your liabilities. Once calculated, it’s a benchmark indicator of your overall financial health and tolerance. Because your current income may vary or could change with little notice, your net worth also takes your savings and debts into account to paint a more accurate picture of your overall financial health. Once tallied, you’ll fall into one of three categories: positive net worth, zero net worth, and negative net worth. These terms are fairly self-explanatory. Positive net worth means the combined value of your assets outweighs your liabilities. Zero net worth means they cancel one another out. And a negative net worth rating means your liabilities don’t cover the value of your current assets.
Calculating Your Personal Net Worth
There are essentially three simple steps involved in calculating your overall financial value, which you can do on a single sheet of paper. Using two columns, list all financial and physical assets with a specific monetary value (savings, checking, etc.) on the right-hand side. Then, list all of your financial debts and liabilities (outstanding loans, credit card balances, etc.) on the left-hand side. Total both columns separately, then subtract your total liabilities from your current assets. Whether positive, even, or negative, that’s your accurate net worth score. The FDIC has a net worth calculating tool that’s divided into helpful sections and you can access it by following this link.
How to Improve Your Net Worth
The key to improving your net worth is to build up your financial and physical assets while decreasing your debts and liabilities – pretty straightforward stuff. There are several strategies you can apply, however, none of them are more valuable than simply concentrating on the basic financial principles for building wealth: Earn more, spend less, and save, save, save! Among the helpful tactics for improving your net worth is the establishment of an emergency fund capable of stabilizing your finances during unexpected downturns. The rule of thumb is three to six months of basic expenses, so be sure to work from an accurate household budget. There are numerous ways to cut your budget by canceling subscription services, better meal planning, and less discretionary spending overall (no more Starbucks and avocado toast!). If you have debts, pay them off sequentially, attacking the highest interest rate liability first, then work your way down. Increasing your retirement contributions will lower your overall tax liability and help you keep more of what you earn. Lastly, there are millions of ways to boost your income. Even a little bit of extra income can eventually make a world of difference.
When it comes to net worth, franchisors are looking for qualified candidates who meet their minimum financial requirements. Every franchise opportunity is different and may require certain investments in equipment and/or staffing just to run the day-to-day operations of the business. That’s why they need to know if you have the capital requirements and money management experience necessary to become a stable and productive franchisee in their system.
If you’re interested in the breakdown of expenses and net worth requirements for the Unleashed Brands’ youth enrichment franchises, follow the links below:
- Class 101 – net worth requirements
- Snapology - net worth requirements
- The Little Gym - net worth requirements
- Urban Air Adventure Park - net worth requirements
- XP League - net worth requirements
If you have any questions, be sure to reach out to us on our contact page!
A Little More About Us…
The Unleashed Brands platform includes Urban Air Adventure Park, Snapology, The Little Gym, XP League, Class 101, and Premier Martial Arts youth enrichment franchises. As the parent company, Unleashed Brands was founded to curate and grow the most innovative and profitable business opportunities that help kids learn, play and grow. Over the last 10 years, the team at Unleashed Brands has built a proven platform and know-how for scaling businesses that focus on serving families. All have become first-in-category brands by providing fun, engaging, and inspiring experiences that help kids with their No. 1 development goal – to become who they were destined to be. To speak with one of our franchise experts and learn more about our children’s business opportunities, simply fill out this form and an Unleashed Brands representative will be in touch shortly.
