Franchise Glossary
ROBS (Rollovers for Business Startups)
A financing strategy that allows individuals to use retirement funds to invest in a franchise without early withdrawal penalties.
ROBS involves rolling over funds from a 401(k) or IRA into a new C-corporation, which then uses those funds to purchase the franchise. This avoids the 10% early withdrawal penalty and income taxes that would apply to a direct withdrawal. While ROBS is legal when properly structured, it is complex and carries significant risk — if the franchise fails, you lose both your business investment and your retirement savings. Work with a specialized ROBS provider and financial advisor — mistakes trigger IRS penalties.
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