Quick answer
Franchise finance funds the cost of entering a franchise system: the franchise fee, fit-out, equipment, initial stock and working capital for a new site, or the purchase price of an existing franchise. Lenders weigh the brand's track record, the disclosure document, the site and lease, the buyer's contribution and, for a resale, the outlet's own trading figures. Property security widens the options for larger or newer outlets.
Key points
- A resale franchise is assessed on its own trading; a new site is assessed on the system and your plan.
- The disclosure document and key facts sheet are as useful to your lender as they are to you.
- Fit-out and future capital spending often cost more than the franchise fee itself.
- Franchisor approval sits alongside finance approval, so run both at the same time.
- Typically funds
- Fees, fit-out, equipment, stock, resale price
- Lenders focus on
- System strength, site, your contribution
- Property-secured
- $20k – $5m
- Unsecured options
- Typically $5k – $500k
Franchise finance is borrowing to get into a franchise system, either by opening a new outlet or by buying one that’s already trading. The money usually covers the franchise fee, the fit-out, equipment, opening stock and enough working capital to get through the first few months. What a lender will offer depends heavily on which of those two paths you’re taking.
A franchise can look like a safe, packaged business. Lenders like the systems and the support, but they know that a brand name on the door doesn’t pay the rent. This page explains how franchise finance really gets assessed, the documents that help, and the costs owners most often underestimate.
New site or resale: why does it matter so much?
The single biggest factor in franchise finance is whether the outlet already trades.
| New franchise site | Resale (existing outlet) | |
|---|---|---|
| What the lender assesses | The system’s performance, the site, your plan and your contribution | The outlet’s own tax returns, BAS and bank statements |
| Main costs | Franchise fee, full fit-out, equipment, stock, launch marketing | Purchase price (goodwill, equipment, stock), transfer fees |
| Unsecured options | Limited, because there’s no trading history to size against | Possible where the outlet’s turnover is steady and verifiable |
| Where property helps | Often essential for the fit-out and fee | Useful for larger prices or a thinner track record |
| Extra hurdle | Site approval and lease negotiation | Franchisor approval of the transfer to you |
A resale works much like any business acquisition loan, with the franchisor added as a third party who must approve you. A new site is closer to a start-up with a strong playbook, which is why lenders usually look for security.
What do lenders look for in a franchise?
The system’s record. How long has the brand been operating in Australia, how many outlets does it have, and how many have closed or changed hands? Lenders who see many franchises have a feel for which systems hold up.
The disclosure document. Before you sign, the franchisor must give you a disclosure document. The ACCC says it must arrive at least 14 days before a franchise agreement is signed, and it covers set-up and running costs, expected capital expenditure, a solvency statement from a director, supply arrangements, and contact details for current and former franchisees. A lender reading it can see the true cost of entry and the ongoing obligations you’re signing up to.
The key facts sheet. Under the current code, which started on 1 April 2025, franchisors usually also have to give you a key facts sheet at least 14 days before you sign or pay anything non-refundable. It’s a summary, and it’s a handy one-page brief for a lender.
Your experience and contribution. Hospitality, retail or trade experience matters, as does what you’re putting in yourself.
The site and lease. Is the lease long enough to repay the fit-out? Does it line up with the franchise term?
What costs do franchisees tend to underestimate?
The franchise fee is visible and negotiated, so buyers budget for it. These costs are easier to miss:
- Fit-out to brand standard. Shopfronts, counters, signage and kitchens built to the franchisor’s specification can be the largest single item. Fit-out finance explains how lenders treat that spending.
- Equipment. Some of it can be financed against the equipment itself through hospitality equipment finance or a chattel mortgage.
- Future capital spending. The disclosure document must describe expected capital expenditure, including significant capital expenditure, and from 1 November 2025 when it’s likely to be required. Refurbishments partway through the term are common.
- Marketing levies, royalties and supply terms. These come out of every week’s takings and reduce the cash available to service a loan.
- Working capital. New outlets often take months to reach normal trading. Budget for wages and rent during the ramp-up.
If the full picture looks manageable, you can tell us about the franchise you’re considering and we’ll look at the funding mix that suits it.
Where does property security fit in?
Because a franchise fee and a fit-out have almost no resale value, unsecured lending (typically $5k to $500k, sized on turnover and bank statements) mostly suits established franchisees: a resale with solid figures, a second outlet for an owner who already trades well, or a required refurbishment.
For a new outlet, property usually carries the deal. Property-secured business loans from $20k to $5m can be written as first or second mortgages or caveat loans over residential or commercial property. Plenty of franchisees use equity in their home through a second mortgage, which leaves the existing home loan in place.
Illustrative example
Illustrative example: a couple with years of experience managing a takeaway chain store want to open their own outlet of a national food franchise in a new shopping strip. The total entry cost is about $480k: the franchise fee, a fit-out built to the brand’s specification, kitchen equipment, opening stock and a working buffer for the first four months. They have $80k in savings and good equity in their home. Around $150k of kitchen equipment is financed against the equipment, and the balance is funded through a second mortgage over the home. The lender is comfortable because the couple know the industry, the system’s other outlets trade well, and the lease runs longer than the loan.
What does franchise finance cost?
Pricing is set on your situation: the security offered, the loan size and term, the strength of the system, your experience and your credit file. On top of interest, budget for establishment and legal fees, any valuation of the property, and the franchisor’s own transfer or training fees on a resale. Equipment finance may also carry a balloon or residual at the end, which lowers repayments during the term but leaves a lump sum to pay or refinance later.
What are the common franchise finance mistakes?
- Treating the franchisor’s figures as a guarantee. Earnings information in a disclosure document is optional and comes with an accuracy statement. Lenders read it carefully; so should you.
- Not speaking to former franchisees. The disclosure document lists them for a reason.
- Mismatched terms. A loan that outlasts the lease or franchise agreement is a red flag.
- Ignoring the cooling-off window. The ACCC notes a 14-day cooling-off period after entering the agreement. Line your finance up so you aren’t committed before it ends.
If you’re comparing a franchise against an independent business in the same industry, the industry finder shows what lenders focus on for each type of business.
Want to know if your franchise plan is fundable?
Whether it’s your first outlet or your third, a short enquiry is the quickest way to find out what’s realistic. It takes about sixty seconds, and there’s no credit check at the enquiry stage. We don’t hand your details to a queue of lenders who’ll all ring you the same afternoon; a real person reads what you’ve told us about the franchise, the site and your security, then calls you. Please be as accurate as you can, especially about the total entry cost and any property you own, so we can line up the right structure first time.
Frequently asked questions
Is it easier to get finance for a well-known franchise?
Often, yes. A system with a long record of outlets that trade well gives a lender comparable data. But the brand doesn't replace your own position: lenders still look at your contribution, credit history, experience and the specific site.
Can I finance a brand-new franchise site with no trading history?
It's possible, but unsecured options are limited because there are no bank statements to size a facility on. Property security is the most common way to fund a new site, sometimes combined with equipment finance for the kitchen or plant.
What does the franchisor have to give me before I sign?
Under the Franchising Code of Conduct, the franchisor generally has to give you the disclosure document and key facts sheet at least 14 days before you sign the agreement or pay a non-refundable amount. Keep both; your lender may ask for them.
Does the franchise fee have any value as security?
Very little. The fee buys the right to trade under the brand, which a lender can't easily sell. That's why lenders focus on the outlet's cash flow, any equipment and, most often, property security.
Can I borrow to pay for a franchisor-required refurbishment?
Yes. Refits required partway through an agreement are a common reason existing franchisees borrow. The outlet's trading history makes these easier to assess than a new site. Our fit-out finance page explains how lenders look at refurbishment costs.
What if I change my mind after signing?
The ACCC explains that franchisees generally have a 14-day cooling-off period after entering the agreement. Make sure your finance is conditional or not yet drawn until that window and any other conditions have passed.