Our Franchise Net Worth Calculator will help you determine how much you can safely and reasonably afford to invest in your new franchise business. This FREE service is fast and easy to use, and will help you establish an accurate value of your total net worth. Franchise Direct provides this convenient interactive tool to assist you with the qualification process toward franchise ownership.
Why is My Net Worth Important?
The figure that represents your net worth is essential in determining an appropriate investment level for any franchise opportunity that you are considering. A statement of your net worth is required by most franchise owners before they will accept you as a franchisee.
It is important to provide the franchisor with your net worth, since many franchisors use a financial model to determine if you are qualified to own their franchise. This Franchise Net Worth Calculator will assist you in quickly determining your qualifying ability.
How is My Net Worth Calculated?
To determine your net worth, you must calculate your assets and your liabilities – your net worth is basically the difference between the two figures. Assets are money and property with monetary value, and liabilities are debts that you owe to others.
Assets are generally divided into three categories – liquid, personal, and investments.
- Liquid Assets are those that can be turned into cash immediately. This is referred to as “liquidation”. Liquid assets include your checking account, savings and money market accounts, cash value of life insurance policies, and any other asset that has the same value as cash.
- Personal Assets are your possessions, and may include the current market value of your home (and other real estate) and automobiles, your furniture, electronic equipment, jewelry and any other personal items that have monetary value. Personal assets are sometimes called Fixed Assets.
- Investment Assets are bank-related assets such as bank CDs (certificates of deposit), stocks and bonds, IRAs (individual retirement accounts), Mutual Funds, and any other type of investments you may have. It is advisable to use the after-tax value of your marketable securities (stocks and bonds) when calculating their value.
Liabilities are divided into two categories – current, long-term.
- Current liabilities include your credit card debt and any loan balances you may have, such as student loans, automobile loans, or other installment loans.
- Long term liabilities include your mortgage and any other debt that you pay over a long period of time.
What is the Next Step?
Now that you know what your assets and liabilities are, determine your net worth by simply subtracting your liabilities from your assets. You now know where you stand financially, and you are in a better position to buy your franchise with confidence. You may want to seek a financial professional, such as an accountant, to verify that your information is correct, and also to authenticate the information for the potential franchisor.
Once you have determined your net worth and know approximately how much money you are able to invest, the excitement begins as you search for your perfect franchise! Explore our comprehensive Franchise Directory to find franchises that match your investment level.