Quick answer
When a franchisor requires a refurbishment, rebrand or equipment upgrade, most franchisees fund it with a mix of cash, equipment finance for fixtures and plant, and a business loan for the building work. Under the 2025 franchising code, franchisors must disclose expected significant capital expenditure and explain how franchisees are likely to recoup it. Start with the disclosure document and the refit's business case, then size the finance to how quickly it pays back.
Key points
- Required refits, relocations, rebrands and technology upgrades are all likely to count as significant capital expenditure under the franchising code.
- From 1 November 2025, franchisors must disclose expected significant capital expenditure and discuss how franchisees will recoup it.
- Existing franchisees have trading history, which makes a refit much easier to finance than a new site.
- Split the cost: equipment and fixtures often suit equipment finance, building works suit a business loan or property security.
- Check what the franchisor or a specific purpose fund will contribute before borrowing the full amount.
Most franchisees fund a required refit with a mix of cash, equipment finance for fixtures and plant, and a business loan or property-secured loan for the building work. Since the 2025 franchising code, franchisors must disclose expected significant capital spending and explain how you’re likely to recoup it, so start with the disclosure document and the business case, then size the finance to the payback.
The letter usually arrives with a render of the new look and a date. Behind it is a decision that can cost more than the franchise fee you paid to get in. Here’s how to work through it, step by step. (If you’re buying into a system rather than refitting an outlet you already run, our franchise finance page is the better starting point.)
What counts as a required franchise refit?
The ACCC’s guidance on disclosing significant capital expenditure says the code doesn’t set a minimum dollar threshold. Instead, spending is likely to be significant if it’s large relative to your initial investment, profits or turnover, if it could make it hard to stay solvent or profitable, or if it goes beyond normal repairs, maintenance, end-of-life replacement or normal inventory.
The ACCC lists major refurbishments, fit-outs, relocations, rebranding, and equipment, software or technology upgrades as likely examples. It also notes they can be required across the whole system, on a regular schedule such as a refurbishment every five years, or when triggered by events such as a lease renewal, a performance review, damage or a relocation.
In practice, most franchisees meet one of these:
- A scheduled refurbishment written into the franchise agreement.
- A system-wide rebrand with new signage, colours and fit-out elements.
- A technology change, such as new point-of-sale, ordering kiosks or kitchen systems.
- A lease-driven refit, where the landlord requires works on renewal.
- A relocation to a new site within the territory.
What does the 2025 franchising code change for franchisees?
A new Franchising Code of Conduct started on 1 April 2025, with some rules applying from 1 November 2025. The ACCC’s guidance on the changes lists several that matter when a refit is on the table. From 1 November 2025, franchisors must:
- disclose significant capital expenditure and discuss it with prospective franchisees before they sign
- give franchisees a reasonable opportunity to earn a return on their investment
- give additional disclosure where franchisees contribute to a specific purpose fund
For significant capital expenditure, the ACCC says the disclosure document should include as much information as practicable about why the spending is needed, its amount, timing and nature, the anticipated outcomes and benefits, and the expected risks. Where details aren’t yet known, franchisors should disclose that it’s possible, what could trigger it and a reasonable range.
You don’t need to become a franchising lawyer. But these rules give you a useful checklist of questions to ask before you commit, and the answers are exactly what a lender wants to see too.
What should you check before you agree to the spend?
- Your agreement and disclosure document. Is the refit something you were told about, on the schedule you were told? Is the cost in the range disclosed?
- The business case. Why is it needed, and what does the franchisor expect it to do for sales? Ask for any results from outlets that have already been refitted.
- Who pays for what. In the ACCC’s rebranding example, the franchisor should say whether a specific purpose fund will cover part of the cost. Supplier rebates, franchisor contributions or landlord incentives can all reduce what you borrow.
- Timing. How long will the store be closed or disrupted? Lost trading during the works is a real cost.
- Your remaining term. Will you have long enough to earn the money back before your agreement ends?
If the request looks well outside what you were told, independent advice is money well spent before you sign anything.
How do franchisees usually finance a refit?
The best structure usually splits the job into parts, because lenders view each part differently:
| Part of the refit | Typical funding approach | Why |
|---|---|---|
| Kitchen equipment, coffee machines, refrigeration | Equipment finance or chattel mortgage | The asset itself is security and has resale value |
| Point-of-sale, kiosks, screens, signage | Equipment or technology finance | Identifiable assets, often with supplier finance options |
| Joinery, flooring, plumbing, electrical, painting | Business loan, cash or property-secured loan | Fixed to the premises, with little resale value |
| Lost trading during works | Working capital or line of credit | Covers wages and rent while takings dip |
| Whole project in one facility | Property-secured business loan | One approval, one repayment, fewer moving parts |
Our fit-out finance page explains how lenders view building works in more detail, and hospitality equipment finance covers the kitchen and front-of-house side.
The big advantage you have as an existing franchisee is trading history. Lenders can look at real bank statements and real sales, so unsecured and cash-flow options, typically from $5k to $500k, are often available. For larger refits, or where you want one facility for the whole job, property-secured business loans run from $20k to $5m.
If your refit letter has a deadline on it, start a quick enquiry and tell us the total cost and the date. We’ll talk through how to split it.
What will a lender ask for?
A refit application for an existing outlet is mostly about showing the store can carry the extra repayments. Expect to be asked for:
- Recent business bank statements, often six to twelve months.
- Your latest financial statements and BAS, showing sales and margins.
- The franchisor’s refit notice and the quotes or scope of works.
- The franchise agreement term remaining and the lease term, because a lender wants the outlet to be open long enough to repay.
- Any franchisor or fund contribution in writing.
- Your payback estimate, even a simple one.
Some lenders also ask whether the franchisor will consent to the finance or to security being taken over equipment, so check your agreement for any approval requirements early. Having the notice, quotes and lease details ready on the first call saves days.
How do you work out whether the refit pays back?
Lenders and franchisors talk about payback, and you should too. A simple version:
- Total cost, net of any franchisor or fund contribution.
- Expected uplift in monthly gross profit, using the franchisor’s figures and your own judgement.
- Extra costs, such as higher repayments, depreciation and any increase in rent.
- Payback period: total net cost divided by the extra monthly profit after costs.
Then compare that payback period with the time left on your agreement. If it pays back in two years and you have eight years left, it’s a comfortable decision. If it pays back in six years and you have five left, you have a conversation to have with your franchisor.
Illustrative example: a quick-service food franchisee
Illustrative only. A quick-service food franchisee with six years left on the agreement receives notice of a required refit to the new brand standard, quoted at $220k. The franchisor’s marketing fund will contribute $30k towards signage.
The franchisee splits the remaining $190k. The new kitchen equipment and ordering screens, about $110k, go on equipment finance. The joinery, flooring and electrical work, about $80k, are funded with an unsecured business loan sized on two years of steady takings. The store closes for nine days, covered by cash reserves. Using the franchisor’s results from refitted outlets, the franchisee estimates the work pays back in under four years, inside the remaining term. The restaurant business loans page covers similar structures for food outlets.
Refit on the calendar? Let’s make the numbers work
A required refit is a big cheque, but for an established outlet with good trading it’s usually very fundable, and the right split between equipment finance and a business loan can keep repayments comfortable. If you’re also thinking about expanding, our guide to funding a second franchise outlet is worth a read.
Getting started takes about 60 seconds, with no credit check when you first enquire. We won’t send your details to a pile of lenders, so you can stay focused on running the store. One of our team will look at your outlet, the refit and the timing, and call you. Please fill the form in accurately, including the full refit cost and your current turnover, so we can match the right option first time.
Frequently asked questions
Can my franchisor make me refurbish my store?
Many franchise agreements include refurbishment obligations, often on a schedule or triggered by events such as a lease renewal. The franchising code now requires franchisors to disclose expected significant capital expenditure and discuss it before you enter the agreement. Check your agreement and disclosure document, and get advice if the request seems outside them.
What counts as significant capital expenditure for a franchise?
The ACCC says the code sets no minimum dollar threshold. Spending is likely to be significant if it's large compared with your initial investment, profits or turnover, or goes beyond normal repairs and maintenance. Major refurbishments, fit-outs, relocations, rebrands and equipment or technology upgrades are typical examples.
Is it easier to finance a refit than a new franchise?
Usually, yes. An existing outlet has bank statements and a trading record, so lenders can size unsecured or cash-flow options on real figures. A new site has to be assessed on the brand, your contribution and often property security.
Can I use equipment finance for a franchise refit?
For the equipment part, often yes. Ovens, coffee machines, refrigeration, point-of-sale systems and signage can usually be financed as equipment. Building works such as joinery, plumbing and flooring are harder to finance that way and are usually covered by cash or a business loan.
What if the refit won't pay for itself before my agreement ends?
Raise it with your franchisor early. From 1 November 2025, franchisors must give franchisees a reasonable opportunity to earn a return on their investment. Bring your own numbers to the discussion and consider independent advice.