Quick answer
An operating franchisee can usually apply for a cash flow loan in the same way as any trading business: the lender reads six to twelve months of bank statements and BAS, then sizes the loan on what's left after costs. The difference is that royalties, marketing levies and franchisor-required spending come off the top, and lenders also look at how long your franchise agreement and lease have left to run.
Key points
- Lenders size a franchisee's cash flow loan on banked turnover after royalties and levies, not on gross sales.
- Time left on the franchise agreement and the lease matters, because the business depends on both.
- Franchisor-required upgrades are common, and since 1 November 2025 they must be disclosed and discussed in advance.
- Check your franchise agreement for any borrowing or security clauses before you apply.
- A system with a strong track record helps, but your outlet's own statements carry the most weight.
If you already run a franchise, you can usually apply for a cash flow loan the same way any trading business does: the lender reads your bank statements and BAS and sizes the loan on what’s left after costs. The twist is that royalties, marketing levies and franchisor-required spending come off the top, and lenders also look at how long your franchise agreement and lease still have to run.
Most finance writing about franchises is about getting into one. This guide is for the owner who’s already in: trading for a few years, paying royalties every week, and now needing cash for stock, staff, a slow season or an upgrade the franchisor has asked for.
How do lenders look at an operating franchise?
A cash flow loan starts with the bank account. For a franchisee, that account has a particular shape: strong, regular takings, and a set of franchisor payments going out against them. The lender’s question is the same as for any business. How much reliably comes in, what has to go out, and how much room is left for a repayment?
What’s different is the list of things that “have to go out”. A franchisee’s fixed commitments typically include:
- Royalties or service fees, often a share of sales taken weekly or monthly;
- Marketing levies paid into a system-wide fund;
- Technology, point-of-sale or software fees charged by the franchisor;
- Rent, sometimes paid to or through the franchisor;
- Required stock purchases from nominated suppliers.
Because many of these move with sales, a lender usually looks at turnover after them, not gross takings. A franchise with impressive headline sales can carry a smaller loan than an independent with lower sales and fewer fees. That’s not a criticism of franchising, just the arithmetic of repayment capacity.
What do lenders check that’s specific to franchises?
Beyond the bank statements, three franchise-specific things come up:
| What’s checked | Why it matters | What to have ready |
|---|---|---|
| Time left on the franchise agreement | The business can’t trade under the brand after it ends | Agreement dates and any renewal terms |
| Time left on the lease | No site, no takings | Lease term, options and any renewal correspondence |
| Franchisor obligations coming up | Required spending competes with loan repayments | Notices about refurbishments, rebrands or tech upgrades |
Lenders may also consider the strength of the franchise system itself, but your outlet’s own trading history carries the most weight. A well-known brand doesn’t rescue a struggling site, and a modest brand doesn’t sink a store that banks well.
If your lease is approaching its end, our guide on unsecured loans when a lease is ending covers how to handle that conversation.
What if the franchisor wants you to refurbish or upgrade?
This is one of the most common reasons operating franchisees need money. A new store design, a rebrand, a kitchen upgrade or a point-of-sale replacement can arrive with a deadline attached.
The rules here have tightened. The new Franchising Code of Conduct took effect on 1 April 2025, and the ACCC’s guidance on significant capital expenditure explains that, from 1 November 2025, franchisors must disclose significant capital expenditure in the disclosure document as far as practicable, covering the reasons, amount, timing, expected benefits and risks. The ACCC lists major refurbishments, fit-outs, relocations, rebranding and technology upgrades as likely examples. For a rebrand during the term, it says franchisors should give reasonable written notice and consult franchisees.
For you as a borrower, that paperwork is useful. A written notice with the scope, cost and timing of a required upgrade is exactly what a lender wants to see. It explains why you need the money, shows the amount is grounded in a quote, and often states how the franchisor expects you to recoup it.
Depending on size, a required upgrade might be funded by:
- a cash flow loan for smaller upgrades and the trading disruption around them;
- fit-out finance for a full store refresh;
- equipment finance for specific machines;
- property-secured funding, from $20k to $5m, if the bill is large and you own property.
Ask the franchisor whether a marketing or specific purpose fund contributes to rebrand costs. The ACCC’s Franchising Code page notes there are rules around these funds, and a contribution reduces what you need to borrow.
Should you check your franchise agreement before borrowing?
Yes. Some franchise agreements have clauses about borrowing, granting security over the business’s assets or making significant changes without consent. Others say nothing. You want to know which one you’ve signed before a lender’s documents arrive, not after.
business.gov.au’s page on buying a franchise reminds franchisees that the franchise agreement is legally binding and that the franchisor can change what you pay and how you operate. That’s worth remembering for loan planning, too: if a fee change is coming, factor it into the repayment you choose.
Not sure how a loan would sit alongside your franchisor payments? Ask us for a straight answer with a short enquiry. A real person will look at your trading and the commitments around it.
How do seasonal swings affect a franchisee’s loan?
Franchise outlets in food, retail and services often have pronounced seasons: school holidays, summer, Christmas or the football season. Royalties keep flowing in the quiet months, just at a lower level, while rent and wages barely move.
That makes the timing of repayments important. A working capital loan or cash flow loan drawn before a busy season, with repayments that the busy months can comfortably carry, often works better than borrowing in the middle of a slow patch. Run your quietest month’s numbers, after royalties and levies, against the proposed repayment before you commit.
What paperwork should a franchisee have ready?
Franchisees often have better records than independent owners, because the system demands them. Use that to your advantage. A tidy pack usually includes:
- Six to twelve months of business bank statements for every account the outlet uses, including any account the franchisor sweeps takings from.
- Recent BAS lodgements, which give an independent read on turnover.
- The franchisor’s sales reports, if the system produces them. They can explain the pattern behind your deposits.
- Key dates: when the franchise agreement and lease each end, and any renewal or option terms.
- Any notice of required spending, with quotes.
- A list of franchisor charges (royalties, levies, technology fees) and when each is debited.
One more thing worth knowing: some franchise systems collect takings centrally and pay the franchisee net of fees. If that’s yours, your statements will show a single net deposit rather than daily sales. Say so up front and include the franchisor’s statements that show the gross figures, so the lender isn’t left guessing why the deposits look smaller than the store’s real trade.
A worked example
Illustrative. A franchised takeaway outlet has traded for four years with steady takings. Royalties and a marketing levy are direct-debited weekly. The franchisor issues written notice of a new menu board system and kitchen upgrade, with a cost of about $70k and a nine-month deadline.
The owner gathers twelve months of statements, the last four BAS, the franchisor’s notice and the supplier quote, plus the lease and franchise agreement dates. Both have more than five years left. The agreement says nothing about borrowing restrictions.
The lender reads turnover after royalties and levies, notes the steady pattern, and sees a fixed, documented need. The owner splits the funding: the kitchen equipment through equipment finance, and a smaller cash flow loan for the menu boards, installation and the two days of lost trading. The repayments are tested against the quietest month of the past year and fit with room to spare. Restaurant-style outlets have more detail on our restaurant business loan page.
Running a franchise and need cash flow? See where you stand
Franchisees are some of the best-organised borrowers we deal with: clear systems, clean reporting, and a franchisor who often puts the reason for the loan in writing. Unsecured and cash-flow options typically run from $5k to $500k, sized on turnover after your franchise fees.
It takes about 60 seconds to enquire, and there’s no credit check when you first enquire. We won’t hand your file to every lender in town, so you won’t spend next week dodging calls. Someone from our team reviews your outlet’s trading and rings you to talk options through, in plain language. Answer the form accurately, including the royalties and levies you pay, so we can match the right option from the start.
Frequently asked questions
Can a franchisee get an unsecured cash flow loan?
Yes, if the outlet is trading with steady deposits. Lenders assess it like any other trading business, sized on banked turnover and repayment capacity, typically $5k to $500k for unsecured options. Royalties and levies are treated as fixed costs, so they reduce the amount the business can carry.
Do I need my franchisor's permission to borrow?
It depends on your franchise agreement. Some agreements contain clauses about borrowing, granting security over business assets or changes to the business, and some don't. Read yours, or ask your lawyer, before you apply, so there are no surprises late in the process.
My franchisor wants a refurbishment. Can a cash flow loan pay for it?
Often, at least in part. Larger refurbishments may suit equipment or fit-out finance, or property-secured funding if the cost is high. Ask the franchisor whether any marketing or specific purpose fund contributes, and how they expect you to recoup the spend.
How does a lender treat royalties on my bank statements?
As a regular commitment, much like rent. If royalties are taken by direct debit as a share of sales, the lender will see them rise and fall with your takings. Label them clearly so they aren't mistaken for loan repayments.
Does it matter if my franchise agreement ends soon?
It can. A lender wants the loan repaid well before your right to trade under the brand ends. If renewal is coming, have the renewal terms or the franchisor's written intentions ready, and choose a loan term that sits comfortably inside the time you have left.