If you’re looking to launch a franchise and want to leverage your retirement savings without penalties or debt, the ROBS (Rollovers as Business Startups) program could be the perfect fit. This powerful funding method allows you to use pre-tax retirement funds to invest in your own business. Below, we explore essential insights and strategies for using ROBS to successfully fund a franchise.
Can I Pay Myself a Salary with ROBS?
Yes, and it’s actually encouraged. With a properly structured ROBS plan, you are allowed to pay yourself a fair and reasonable salary, as defined by IRS guidelines. This not only ensures you’re compensated for your efforts, but it can also be essential if you are combining ROBS with traditional financing options that require demonstrated income.
First Steps: How to Prepare for ROBS Funding
Before diving into the ROBS process, preparation is key. Here’s what franchisees should do:
- Schedule a call with Benetrends to learn about all available funding options
- Be ready to discuss:
- The franchise brands or businesses you’re considering
- Estimated project cost range
- Your timeline for launching the business
- Your current financial snapshot (liquidity, credit score, retirement account balances, etc.)
This early preparation ensures a smooth and efficient funding process.
Why Choose ROBS? The Major Advantages
ROBS stands out as a funding method because:
- It’s not a loan and does not accrue interest
- There are no taxes or penalties when structured properly
- You retain full control and ownership of your business
- You can reinvest in your future by making tax-deferred contributions to the new retirement plan within your business
Ultimately, it’s a debt-free way to launch your franchise with funds you’ve already earned—without sacrificing your financial security.
What Do You Need to Know Before Starting ROBS?
To ensure ROBS is the right fit, keep these key points in mind:
- You should have at least $50,000 in eligible retirement funds for it to make financial sense
- You can use multiple accounts or a portion of a single account
- Eligible accounts include:
- Traditional 401(k)s
- Traditional IRAs
- Rollover IRAs
- Other inactive, pre-tax retirement accounts not tied to a current employer
- Roth IRAs and retirement accounts tied to an active employer are not eligible
Common Mistakes and How to Avoid Them
One of the biggest missteps is not consulting with a funding expert early in the process. Franchisees who go it alone may miss out on better financing combinations or misunderstand ROBS requirements. Here’s how to avoid costly errors:
- Work with a trusted partner like Benetrends to review all available funding options, not just ROBS
- Have a clear idea of your business goals, total startup costs, and financial profile
- Avoid waiting until the last minute—timing matters when setting up your funding strategy
Start Smart with Benetrends
With decades of experience and thousands of successful clients, Benetrends is a trusted leader in ROBS funding and franchise financing. Our expert team is here to guide you through every step, from evaluating your funding options to launching your franchise with confidence.
Ready to take the first step? Schedule your free consultation with a Benetrends funding expert today.
Jade Maloney, Senior Funding Consultant
Contact Jade: https://www.benetrends.com/jade-maloney/