How to Use Your 401(k) to Fund Your Franchise TAX-FREE with the ROBS Program

Bet on Yourself: How to Use Your Retirement Savings to Launch a Franchise

Investing in your future is a core principle for most entrepreneurs, and traditional retirement savings have always been a popular way to prepare for life after work. But what if you could leverage those same funds now to start a business, without paying penalties or taxes? With the Rollover as Business Startup (ROBS) program, that's exactly what 18% of American business owners are doing. At Franchise Sidekick, we’re passionate about helping people achieve their entrepreneurial dreams, and the ROBS program is a fantastic tool to empower you to take that first step.

What Is the ROBS Program?

ROBS is a unique strategy that lets you use your retirement funds to invest in your own business rather than someone else's stock or mutual fund. Unlike traditional investments, where your growth is dependent on corporate performances outside of your control, ROBS enables you to bet directly on yourself. Imagine investing in Apple or Tesla but with the outcome directly tied to your own hard work and vision.

To qualify for the ROBS program, you need to have at least $50,000 in retirement funds and be ready to form a C-Corp business structure, as well as take on the role of both employer and employee in the business. Franchise Sidekick can connect you with the right resources to get your business structure in place, helping you get started with confidence.

Why Use ROBS?

Many Americans have seen the challenges of today’s market, from economic recessions to volatile stock prices influenced by a single tweet. While traditional retirement plans still offer the benefits of compound interest and tax-deferred growth, they also leave your money vulnerable to market swings beyond your control. By using ROBS, you can diversify your retirement strategy by taking an active role in your investment, building wealth through entrepreneurship rather than passively watching the market. With ROBS, you can fund a down payment on a franchise, while leaving a portion of your retirement savings in the market to continue growing.

Requirements and Considerations

To make ROBS work for you, it’s important to consider the startup costs and management responsibilities involved with establishing a C-Corp. There are also legal and corporate obligations, which can seem overwhelming at first, but Franchise Sidekick’s advisors are here to help. For example, our advisor recently helped a client use ROBS to acquire their Bloomin' Blinds franchise—a perfect example of how this strategy can turn retirement savings into an entrepreneurial venture.

When used wisely, ROBS can be the tool that bridges the gap between wanting to start a business and having the capital to make it happen. It’s a strategic way to live life on your terms, whether that’s diversifying your retirement savings or stepping into an industry you’re passionate about.

Take Control of Your Future

If you're serious about becoming a business owner, but feel held back by your current finances, take a look at your retirement funds. ROBS might just be the solution you need to unlock your potential. The program isn’t for everyone, but for those willing to bet on themselves, it can open doors to the entrepreneurial journey of a lifetime. Visit Franchise Sidekick’s Resource Center or schedule a free 10-minute call with one of our advisors to see if ROBS is the right fit for you.