Yes, you can use a severance package to buy a franchise. Start from your net severance, after taxes and a living-expense reserve, and treat it as the equity injection in a financing package that may also include savings and lender financing. For a laid-off executive, the strongest fit is a franchise with recurring B2B contract revenue, essential-service demand, and a leadership role instead of a front-line operator role, such as a master franchise in commercial cleaning.
Stratus Clean is the 4th largest commercial cleaning franchise in North America, ranked #1 Fastest-Growing on Entrepreneur's list for four consecutive years, and 86% of our master franchisees told Franchise Business Review they would do it again. Many of those owners came from corporate careers, and some arrived with a severance package.
A layoff ends a job. It does not end a career. For an executive with a severance package, that capital can fund a business you own, in a territory you control, with revenue that renews every month. This guide covers what your severance is really worth, what franchise ownership costs at each tier, how to fund the purchase, and how to judge earning potential responsibly.
For many executives, buying makes more sense than applying, because the comparable roles are shrinking.
Through July 2026, U.S. employers announced 477,033 job cuts, according to Challenger, Gray & Christmas. Technology accounted for 31% of them, and artificial intelligence was the leading cited reason for five consecutive months, appearing in roughly 24% of all announced cuts this year.
Two things stand out for a displaced executive:
Franchising is moving the other way. The sector is projected to reach $921.4 billion in output across 845,000 establishments in 2026, and commercial and residential services are tied for the fastest-growing franchise sector at 3.2% year over year. Commercial cleaning is an essential service that AI does not meaningfully disrupt. We cover its track record through past downturns in Why Commercial Cleaning Is One of the Most Recession-Resilient Businesses You Can Own.
Before you evaluate any franchise, convert your package into a usable number.
Severance scales with seniority and tenure. LHH's benchmark data shows these averages, with most plans adding a per-year-of-service formula on top. Vice presidents and above frequently negotiate materially more.
| Role level | Average severance (LHH benchmark) | What often gets negotiated on top |
|---|---|---|
| C-suite | About 16 weeks | Equity acceleration, bonus treatment, extended benefits |
| Director | About 15 weeks | Per-year-of-service add-ons |
| Manager | About 13 weeks | Per-year-of-service add-ons |
| Step | What to subtract or confirm | Why it matters |
|---|---|---|
| 1. Start with gross severance | Lump sum or salary continuation, plus any bonus or equity payout | This is the headline number, not the usable one |
| 2. Subtract taxes | Federal and state withholding; a lump sum can raise your bracket for the year | The IRS taxes severance in the year you receive it |
| 3. Subtract a living-expense reserve | Household costs for the full ramp-up period | Keeps the business from funding your mortgage |
| 4. Check restrictive covenants | Non-compete and non-solicit scope and timing | Can limit which businesses you can buy, and when |
| 5. Add other liquid savings | Cash and taxable investments you are willing to deploy | Lenders look at total documented capital |
| = Investable capital | What remains | Sets the franchise tier that is realistic for you |
The IRS is explicit that severance pay is taxable in the year you receive it, reported on your W-2 with federal and state withholding. We also ask about your living-expense reserve during qualification, because it protects you. The number you end with, combined with your net worth, determines which franchise ownership tier is realistic.
It can, depending on its scope. Non-compete and non-solicit clauses attached to severance commonly run 6 to 24 months and usually restrict work that competes with your former employer or solicits its clients and staff. A franchise in an unrelated B2B service category, such as commercial cleaning, may not conflict with a corporate non-compete, but have an employment attorney confirm the scope and timing before you sign a franchise agreement or your separation agreement.
Franchise investments range from a few thousand dollars to several million. The FTC Franchise Rule requires every franchisor to disclose the estimated initial investment in Item 7 of the Franchise Disclosure Document, so you can compare brands side by side.
| Investment tier | Typical total investment | Examples | Your role |
|---|---|---|---|
| Low | Under $50,000 | Hands-on cleaning units, mobile services, home-based businesses | You perform or directly supervise the work |
| Mid-range | $50,000 to $350,000 | Fitness studios, home-service brands, executive-model B2B franchises | Operator or leader, depending on the model |
| Premium | $800,000 to $2.5 million+ | Full-service restaurants, hotels, large-format retail | Investor-operator with real estate, staff, and layered financing |
Initial franchise fees for established brands generally range from $25,000 to $50,000, but the fee is only one line in Item 7. Build-out, equipment, inventory, insurance, and working capital make up the rest.
A Stratus Clean master franchise sits in the mid-range tier, at $275,000 to $300,000 all in, with $250,000+ in net worth and $125,000 to $150,000 in liquid capital required. Qualifying veterans receive a 10% discount on the initial franchise fee through VetFran. At that level, a single-unit franchise typically buys one location, a lease, a build-out, and a payroll. A master franchise buys the rights to an entire region with no cleaning crews on your payroll. Our master vs. unit franchise comparison covers the difference.
You do not have to fund a franchise from severance alone. Most buyers combine sources, and the right mix depends on how much liquidity you want to keep in reserve.
| Funding source | Role in the deal | Watch out for |
|---|---|---|
| Net severance and savings | Your equity injection; lenders want documented personal capital | Do not include your living-expense reserve |
| Business loan | Covers the balance after your equity injection | Approval timing; start with a franchise-experienced lender early |
| Retirement rollover (ROBS) | Rolls 401(k) funds into a new C corporation | IRS compliance scrutiny; use only with specialized counsel |
| Franchisor-related financing | Varies by system and ownership level | Ask what financing relationships exist at your level |
For more on matching funding to risk tolerance, read Paying for a Franchise: Considerations to Help Entrepreneurs Avoid Regret.
With severance on the line, discipline matters most here. Only Item 19 of the FDD contains financial performance representations the franchisor is legally accountable for, and the FTC requires the franchisor to disclose the assumptions behind every figure. If a brand will not put numbers in Item 19, weigh that silence. Ask four questions:
Stratus masters earn from nine revenue streams, roughly 90% recurring, because the janitorial contracts they win and assign to unit franchisees renew month after month. Franchised regions averaged $3.2 million in unit volume in 2025, the top five regions averaged $9.5 million, and system-wide sales reached $238 million.* These figures describe system performance, not what an individual master earns. We walk through Items 7 and 19 with you during discovery.
Many franchise models put the owner inside the operation. A master franchise puts you above it, as the franchisor for your region. You award unit franchises in a protected territory, win commercial cleaning contracts with schools, medical offices, warehouses, and gyms, and assign them to independent unit owners. You lead a network, not a crew, which is why executives from education, sales, insurance, engineering, and retail have built Stratus territories with no prior cleaning experience. Our guide for former VPs covers how corporate skills map to the role, and our candidate fit guide walks through the profile.
David Smith, who owns Stratus Clean of Nashville, flew helicopters in the Army and spent 20 years with Mercedes-Benz before becoming a master franchisee. He points to the recurring-revenue model and "the idea of selling a need rather than a want." Michael Seiler of Stratus Clean of Southeast Louisiana is more direct: "Would I do it over? Probably three more times."
An executive leaving a large organization also leaves its infrastructure behind. Stratus replaces it with one week at corporate headquarters and two weeks onsite in your territory with a dedicated onboarding coach, the StratusConnect operations app, a national insurance program, a National Accounts program, and a peer network across 100+ master territories in the U.S. and Canada.
Run these steps for any franchise you consider, including ours. For the full master-level due diligence list, see our master franchise buyer's checklist.
The best franchise after a layoff is one your net severance and savings can fund without touching your living-expense reserve, with recurring contract revenue, essential-service demand, and a role that uses your existing management and sales experience. For former executives, a master franchise in B2B commercial cleaning fits those criteria: Stratus Clean masters earn from nine revenue streams, roughly 90% recurring, in a protected regional territory.
Yes. Plan around your net severance after taxes, set aside living expenses for the ramp-up period, and use what remains as the equity injection in a financing package that may also include savings and lender financing.
Yes. The IRS treats severance as taxable wages in the year you receive it, reported on your W-2 with federal and state withholding. A lump-sum payment can push you into a higher tax bracket for that year, so model your net figure before you plan a franchise investment.
It depends on the clause. Restrictive covenants attached to severance commonly run 6 to 24 months and usually cover work that competes with your former employer. A franchise in an unrelated category, such as commercial cleaning, often falls outside that scope, but an employment attorney should confirm it before you sign.
It may be part of it. A Stratus Clean master franchise typically costs $275,000 to $300,000 all in and requires $250,000+ in net worth and $125,000 to $150,000 in liquid capital. Most buyers combine net severance with savings and, in some cases, lender financing. See the full investment breakdown.
Protected territories remain open in many U.S. states and Canadian provinces, though availability changes as we award markets. Review the available territories page or ask our team directly.
A severance check is a one-time payment. A protected territory with recurring revenue is an asset that compounds. If you are ready to evaluate the master franchise opportunity with the same rigor you brought to your corporate career, start a conversation with Rob Lancit, Vice President of Franchise Development. We will send you the FDD, connect you with current masters, and help you decide whether this is the business you should own next.
*Calculation and further explanation of the Average Unit Volume, Average of Top 5 Performing Regions, and System-wide Sales appear in Item 19 of the Stratus Clean Franchise Disclosure Document. Individual results may differ. See Item 19 for financial disclosures and Item 7 for total investment information.
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