Liquid capital
What it means
Liquid capital is money you can actually deploy now, savings, offset funds, readily sellable assets, as opposed to wealth tied up in your home or superannuation. Franchisors and lenders frequently require a minimum liquid figure separate from overall net worth.
It matters because a franchise needs cash up front and a buffer through the ramp-up. Being asset-rich but cash-poor is a common reason applications stall or businesses run short in month three.
In practice
Calculate your genuine liquid capital before you apply. If a system needs $60,000 liquid and you have exactly that, you have no working-capital buffer, a warning worth heeding.
A real example
A buyer with $400,000 net worth but only $50,000 liquid is declined for a franchise requiring $80,000 liquid, because most of his wealth is locked in property.
Liquid capital, FAQs
What is liquid capital for a franchise?
The cash and readily accessible funds you can deploy now, savings and easily sold assets, as opposed to wealth tied up in property or super. Franchisors often set a minimum liquid figure.
How is liquid capital different from net worth?
Net worth is all your assets minus liabilities; liquid capital is only the portion that is cash or quickly accessible. Franchisors and lenders often require a minimum of both.
See the full franchise glossary, the Fee Index or our buyer guides.