Purchasing a Franchise with a ROBS Account: A Complete Guide for 2026 Entrepreneurs

Buying a franchise is one of the most popular ways to start a business in the United States. It offers a proven business model, brand recognition, operational support, and established systems that significantly reduce risk compared to starting from scratch. Yet one challenge consistently stands in the way of aspiring franchise owners: capital. Traditional business loans require credit approval, personal guarantees, and often significant collateral. For many entrepreneurs, even strong credit is not enough to secure the funding needed to acquire a franchise.

This is where retirement funding—and specifically the ROBS solution—can change everything.

Purchasing a Franchise with a ROBS account allows you to use retirement funds to purchase or start a business without paying taxes, penalties, or taking on debt. For entrepreneurs with substantial retirement savings, ROBS unlocks capital that would otherwise be inaccessible, while remaining fully compliant with IRS and ERISA rules.

In this guide, we’ll explain what ROBS is, how it works, why it is such a powerful funding strategy for franchise buyers, and why choosing the right ROBS provider is critical to long-term success.

Why Franchises Are Ideal Businesses for ROBS Funding

Franchises combine entrepreneurship with structure. Instead of inventing a product, process, and brand from scratch, franchise owners step into a business with established systems, supplier relationships, marketing programs, and training pipelines.

From a funding perspective, franchises are particularly well-suited to ROBS because they have the characteristics retirement plans prefer: formal legal structure, audited financials, operational clarity, and scalability. They are generally less speculative than startups and often have predictable cash flow patterns that support payroll, reinvestment, and growth.

Franchises also align with retirement funding because they are long-term investments. Most franchise success stories are built over years, not months, which mirrors the timeline retirement accounts are designed for. Instead of exposing your retirement savings to stock market volatility, ROBS allows you to invest in a controlled business environment where performance depends on execution and management.

Why Use a Retirement Account to Buy a Franchise?

For many business owners, retirement accounts represent their largest pool of capital. Until ROBS became widely used, these funds were effectively locked away until retirement age.

Using retirement funds through ROBS offers three advantages no bank loan or outside investor can match:

• Avoid debt. There are no interest payments, personal guarantees, collateral requirements, or underwriting delays.
• Preserve ownership. ROBS allows you to retain full operational control without giving up equity to outside investors.
• Eliminate taxes and penalties. Retirement funds are rolled into a business-owned 401(k) without triggering ordinary income taxes or early withdrawal penalties.

Instead of making monthly payments to a lender, you are investing in yourself, and every dollar stays inside your business.

What Is a ROBS Account?

ROBS is the only legal way to use more than $50,000 in retirement funds to start or acquire a business in which you actively work, without taking a distribution or paying taxes or penalties.

ROBS works by leveraging a special exception in IRS prohibited transaction rules under Internal Revenue Code Section 4975. While IRAs prohibit business ownership where the account holder is involved, qualified 401(k) plans are specifically allowed to purchase employer stock, known as “qualifying employer securities.”

This exemption allows a properly structured 401(k) plan to become an equity owner in your business. Unlike a self-directed IRA, which permits only passive investing, ROBS lets you be fully involved in operations while remaining compliant.

How ROBS Works Step-by-Step

A ROBS structure involves five coordinated steps:

1. A new C Corporation is formed. ROBS requires a C Corporation because qualified retirement plans can purchase C Corp stock, but not LLC interests or S Corp shares.
2. The corporation adopts a custom-designed 401(k) plan that explicitly allows investment in employer stock.
3. Funds from an existing retirement account, such as a former employer’s 401(k) or IRA, are rolled into the new plan through a tax-free trustee-to-trustee transfer.
4. The 401(k) plan purchases newly issued shares of the corporation at fair market value.
5. The corporation uses those funds to buy the franchise or begin operations.

At no point do funds pass through the individual’s hands. Everything stays inside the retirement plan and corporate structure from start to finish.

Why ROBS Is Legal

ROBS is grounded in federal law. Congress explicitly allows retirement plans to invest in the stock of sponsoring employers. The IRS has confirmed that ROBS can be compliant when implemented correctly, but improper design or administration can cause disqualification. Most ROBS failures result from providers who cut corners, fail to provide ongoing plan administration, or design plans that violate participation rules. This is why working with an experienced provider is crucial.

Advantages of Using ROBS to Buy a Franchise

• Tax-free and penalty-free access to capital.
• The ability to actively run the business.
• Dividends and profits grow tax-free inside the 401(k).
• Stock sale gains flow back to the plan without immediate taxation.
• C Corporations benefit from lower corporate tax rates.
• Employees may participate in the retirement plan as your business grows.
• You can invest in yourself, directing retirement savings toward your own business rather than external investments.

Comparing ROBS, SDIRA, and Solo 401(k) Loans

Feature	ROBS	Self-Directed IRA	Solo 401(k) Loan
Can fund business you work in	✅ Yes	❌ No	❌ No
Tax-free funding	✅ Yes	❌ No	✅ Yes
Ownership limits	No limit	Under 50%	N/A
Loan obligations	None	None	Required
Plan type	401(k) only	IRA	401(k)
Business structure	C Corporation	Any (passive only)	Any
Funding limits	Unlimited	Ownership capped	$50,000 max

Why IRA Financial Is the Leader in ROBS

IRA Financial is widely recognized as the industry authority on ROBS structures. Founded by Adam Bergman, one of the nation’s foremost self-directed retirement attorneys, IRA Financial has successfully structured thousands of ROBS arrangements over more than 16 years.

Unlike providers who set up paperwork and disappear, IRA Financial offers ongoing support, including:

• Custom plan design
• Corporate formation
• Continuous compliance support
• Tax consultation
• Annual plan administration
• IRS reporting
• Audit defense

Adam Bergman has authored multiple books on ROBS and self-directed retirement planning. Entrepreneurs nationwide—from restaurant franchises to retail chains, professional practices, and manufacturing businesses—trust his firm to guide them safely through the ROBS process.

Conclusion: ROBS Is the Ultimate Entrepreneur’s Tool

ROBS is a legal, IRS-recognized strategy that allows entrepreneurs to turn years of disciplined retirement savings into business ownership—without penalties, debt, or surrendering control.

When properly structured and administered, ROBS offers confidence: confidence that your capital is working for you, confidence that your efforts build both income and retirement simultaneously, and confidence that your future is determined by execution, not Wall Street.

For franchise buyers serious about long-term independence, ROBS is more than funding. It is empowerment, and when paired with the right partner, it can be truly transformative.