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So you want to get into the franchise business? Sounds great. Franchise concepts are some of the best investments anyone could make. High returns. Low stress (mostly). And pretty much recession proof. How do you plan to finance it? Out of pocket is an option. But mixing personal and business funds is never a good idea. Are you going to get a loan? Franchises are great investment - why reduce your margins by paying interest on a loan. Alternative financing has an option that will allow you to invest in a business without taking on any new debt.


Standing for Rollover for Business Startups, the ROBS transaction was developed specifically for the franchise entrepreneur. Individuals who have worked in corporate america for years. They have the skills and industry know how to start their own business. They just don’t have the funding to get there. Well in this case. They do.

What does a smart employee do the first day they begin work? After signing the W9’s. After filling out the non-compete. What comes next? You might have already guessed it. The smart employee enters into a taxed deferred retirement plan - 401(k), IRA, or the like. Why is it smart? A little bit saved over a long period of time can result in monumental gains. 401(k)s and IRAs were designed for just that. Employers often match 3-5-10% annually into plans like this.. An account that grows with interest, grows with matching, and grows with tax deferment - this is a real life scenario of a win-win-win. Of course there is a catch. Age 59 ½ is the required age of anyone who plans on withdrawing funds from their retirement plan without incurring hefty tax penalties. That's when our hero steps in.

The ROBS transaction allows individuals to access 100% of their retirement money tax free and without penalty. The funds can be reinvested into viable businesses such as franchises, routes, and business opportunities. Every cent spent from the investment becomes a tax write off for the business. It is the best way to become both the owner and the investor in a business without taking on any new debt.


So how does one gain access to their retirement prior to age 59 ½ without incurring any tax penalties while gaining all the benefits noted above? Let’s take a step away from reading and move to a handy dandy infographic!


Individuals should never attempt this on their own. There are fine intricacies to the ROBS that are far too easy to overlook, and if overlooked cause detrimental effects - hint hint: IRS audits. Leaving those intricacies to the lawyers, CPAs, and your funding company is best. In terms of having a basic understanding of the program, the infographic does a great job explaining the fundamentals.

  1. Create a C-corporation

  2. C-corp adopts a 401(k) plan

  3. Roll funds over from a previous employer's 401(k) into the new company owned 401(k)

  4. The 401(k) invests capital into purchasing the C-corp stocks

  5. Proceeds from the investment are deposited into the C-corps bank account

  6. Funds can now be used for the growth and success of the C-corp


Essentially at this point the owner of the company has traded the funds in their 401(k) for the opportunity to start a business. So what about retirement? That’s the risk. The new business is the new retirement plan. Is that it? Luckily there is an exit plan.

As the business becomes profitable the corporation is directed to start buying back portions of stock from the 401(k) plan. These newly available funds can now be used to invest back into safe investments such as blue chip stocks and commodities. Every stock that the corporation purchases attributes to the overall expenses the company has. This decreases the “profitability” of the company, reducing taxable revenue. It is recommended that any profit beyond made by the company during the initial startup years (the first 3-5 years) are invested into purchasing back company stock. This process typically takes 5 years depending on the profitability of the business and size of the old plan. Eventually the old plan is fully recuperated to where it once was, the owner carries no debt, the company starts accumulating more assets, and the corporation is eventually converted into an S-corporation - which takes on far fewer tax responsibilities.


The ROBS transaction is created for the smart investor. The career focused entrepreneur who is guaranteed a return on investment. Safe bets are essential; franchises, routes, acquisitions. The benefits are endless but most prominently the business owner can start without any debt. They become the owner and the investor; the beginning and the end; the alpha and omega. With small business being the foundation of any economy, the federal government has allowed this kind of transaction and seems to encourage it with tax credits and business tax write-offs. Business is booming and this transaction is becoming more popular than ever. Be responsible. Be critical. Be prepared.


  • Startup or Existing Business

  • Start Business Debt Free

  • Invest in yourself rather than Wall Street

  • Be the Owner and the Investor

  • No Tax Penalties or Taxable Distribution

  • No Credit Requirements

  • No Bank Involvement

  • No Collateral

  • Can be used for any business expense

  • Total control over Your Business

  • Long term tax support

  • Tax Credits & Business Write-offs


  • Minimum $35,000 - $50,000 needed

  • No Pensions Allowed for Transaction

  • Account must be from Previous Employer

  • Structure must be a C-Corporation

  • Must hire qualified plan tax advisers

  • Initial cost ranges from $3,495 - $5,995

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