Quick answer
Franchise finance helps you pay for a franchise: the upfront fee, fit-out, equipment, stock and working capital, or the purchase of an existing franchised outlet. Lenders assess both you and the franchise system. Ownright Custom Finance arranges franchise finance Australia-wide, including when a bank has declined or the structure is unusual.
Key points
- Costs go beyond the franchise fee: fit-out, stock, equipment and working capital
- Lenders look at the franchise system and your own strength
- The disclosure document is central to understanding the costs
- Buying an existing outlet has a different structure to a new one
- Ownright arranges franchise finance Australia-wide
- Suits
- First-time franchisees, multi-unit owners and those buying resale outlets
- Security
- Property, equipment, personal guarantees or the franchise assets
- Key document
- The franchisor's disclosure document and franchise agreement
- Australia-wide
- Yes
What is franchise finance?
Franchise finance is any loan or facility that helps you buy into, set up or grow a franchised business. It might pay the initial fee and fit-out for a brand-new outlet, fund the purchase of an existing one, or provide working capital while a new store finds its feet.
Franchising offers a proven system, but it does not remove the need for money. Costs add up quickly, and the franchisor’s published figures are rarely the whole story. A good finance structure starts with understanding the total cost to open and the cash needed until the outlet breaks even.
Who does franchise finance suit?
- First-time business owners entering a franchise system
- Experienced operators moving into franchising
- Multi-unit franchisees adding another outlet
- Buyers of resale franchises
- Existing franchisees refurbishing to meet a franchisor’s new standards
- Franchisees refinancing debt from the original purchase
If you are weighing up a first venture, start-up business loans covers how lenders handle new owners.
What does the disclosure document tell you?
Under the Franchising Code of Conduct, a franchisor must give a prospective franchisee a disclosure document at least 14 days before the franchise agreement is signed, as explained by the ACCC. It follows a set format and includes, among other things:
- A solvency statement signed by a director
- Financial reports for recent years
- Costs of setting up and running the franchise
- Supply arrangements and any rebates the franchisor receives
- Numbers and contact details of current franchisees, and details of former ones
- Details of legal action involving the franchisor
- Future capital expenditure franchisees may have to pay
From 1 November 2025 the document must also cover specific purpose fund payments and when significant capital expenditure may be needed. Lenders often ask to see it, and it is a useful starting point for building your funding request.
What can franchise finance pay for?
| Cost | Finance route |
|---|---|
| Initial franchise fee and training | Term loan or business acquisition loan |
| Fit-out and signage | Secured term loan |
| Equipment and vehicles | Equipment finance |
| Opening stock and early wages | Working capital loans |
| Buying an existing outlet | Acquisition finance, see how to fund a business purchase |
| Refresh required by franchisor | Refurbishment loan or refinance |
What do lenders look at in a franchise?
Lenders typically weigh up two things: the system and the operator.
The system
- How established the brand is and how many outlets operate
- Franchisee failure or exit rates, which the disclosure document helps reveal
- Support, training and supply arrangements
- Whether the franchisor’s financial position is sound
The operator
- Industry or management experience
- Personal contribution and credit conduct
- Security offered
- Realism of the budget and cash-flow expectations
For resale outlets, they also review the outlet’s takings, the lease and the franchisor’s consent to transfer.
How does Ownright approach franchise finance?
Trevor Scott has spent more than 40 years in finance and has seen franchise deals from the inside. Our approach is to stress-test the numbers with you before a lender does. We read the disclosure document, ask the questions you may not have thought of and then find lenders who suit the system and the circumstances.
When a bank turns cautious about a particular brand, we look at non-bank and private routes. We work Australia-wide from our Knoxfield base. When you are ready to talk, give us the outline and we will start from there.
Franchising versus independent start-up
| Factor | Franchise | Independent start-up |
|---|---|---|
| Brand recognition | Existing | Built from scratch |
| Up-front costs | Fee plus fit-out to franchisor standard | Fit-out to owner’s design |
| Lender comfort | Often higher with proven systems | Relies on owner and plan |
| Ongoing costs | Royalties and fund contributions | Own marketing and systems |
An illustrative example
Imagine an experienced retail manager who wants to buy a resale outlet in a regional centre. The outlet is trading, but the franchisor requires a refit within two years. A broker could look at a purchase loan, with some funds reserved for the refit and working capital, supported by property the buyer owns. This is illustrative only, and the outcome depends on the lender and the facts.
Mistakes to avoid
- Signing before the funding is arranged
- Underestimating working capital for the early months
- Ignoring royalties, marketing levies and future capital expenditure
- Failing to speak with current and former franchisees
- Over-borrowing on fit-out and leaving no buffer
- Overlooking the franchisor’s consent requirements for transfers
What documents should I have ready?
- Photo ID and a summary of relevant experience
- The disclosure document and draft franchise agreement
- Lease or lease offer
- Budgets and cash-flow forecast, including the franchisor’s estimates
- Personal financial position, including assets and debts
- For a resale: the outlet’s financials, tax returns and BAS
- Quotes for fit-out and equipment
Our business loan documents checklist lists the common items.
Franchise finance by industry
Food and beverage franchisees may find our hospitality business loans page useful. Retail franchisees can look at retail business loans.
What should you ask before you sign a franchise agreement?
A lender will ask many of these questions anyway, so it pays to have the answers first. Useful ones include:
- What does the franchisor say the outlet will cost to open, and how does that compare with what current franchisees say they actually spent?
- How long did the typical franchisee take to reach break-even, and how much did they draw on working capital while waiting?
- Which suppliers must you use, and does the franchisor take a rebate on what you buy?
- What happens at the end of the term, and what does a renewal cost?
- Can you sell the outlet, and on what conditions does the franchisor approve a buyer?
- Are there refurbishment or technology upgrades that could land during the loan term?
The Franchising Code also includes a short cooling-off window after signing, but it is no substitute for sorting the funding beforehand. Independent legal and accounting advice on the agreement is worth having alongside the finance conversation.
How do the lease and the franchisor’s consent affect your loan?
Two third parties sit behind almost every franchise outlet: the landlord and the franchisor. Lenders want comfort from both.
The lease matters because the fit-out is only worth what the right to occupy it is worth. A lender will look at the term remaining, renewal options, the rent review mechanism and whether the landlord has agreed to the franchisee. Retail and commercial leasing rules differ between states and territories, so a lease signed in Perth does not always behave like one signed in Hobart.
The franchisor matters because most agreements restrict what you can pledge as security and require consent to a change of ownership or a mortgage over the business. Raising these early avoids a settlement date that slides while someone waits for a signature.
Which finance structure suits which situation?
| Situation | Structure that may suit |
|---|---|
| New outlet, owner has property | Term loan secured on the property, with fit-out and working capital funded together |
| New outlet, no property | Equipment finance for plant, plus a smaller working capital facility |
| Resale of a trading outlet | Acquisition loan assessed on trading history, sometimes with vendor assistance |
| Mandatory refurbishment | Refit loan, or a refinance that rolls the refit into existing debt |
| Second or third outlet | Group-level facility assessed on combined performance |
| Debt from the original purchase has become heavy | Refinance into a longer, better-matched structure |
The right answer depends on the lender and the file, and a broker earns their keep by testing more than one route.
Growing from one outlet to several
Multi-unit owners face a different assessment. Lenders look at how each outlet performs, how debt is spread, and whether a weak site is being carried by a strong one. Keeping each outlet in a clearly separate entity can help in some cases, but it also affects how guarantees and cross-security are drawn up. Plan the structure before the second purchase, not after, because untangling it later is slower and often costs more in legal work.
Does franchise finance differ by state or territory?
The lending principles are national, but several practical points vary. Stamp duty on a business or property purchase is set by each state and territory revenue office. Retail leasing legislation differs by jurisdiction. Licensing for food, alcohol, fitness or childcare businesses is handled locally. A franchise operating in Queensland and one in South Australia can therefore face different closing costs and approval timelines even under the same brand. Ownright lends and arranges Australia-wide, so we factor these in when we plan your settlement. For help with local context, see our pages on loans in Victoria and loans in regional and remote Australia.
Ready to explore your franchise?
Before you sign, it helps to know the funding is workable. Talk to Ownright about the franchise you have in mind and we will explore what could be possible. If Ownright can’t find the solution, no one can.
How it works, step by step
- 1
Step 1
We walk through the franchise, the disclosure document and what the total cost to open really looks like.
- 2
Step 2
We shape the request: purchase loan, fit-out finance, working capital or a combination.
- 3
Step 3
We present you and the outlet to lenders in the way they like to see it.
- 4
Step 4
We manage the paperwork and timing so settlement lines up with your opening or takeover date.
Frequently asked questions
Can I get a loan to buy a franchise?
Yes, it can be possible. Lenders look at the franchise system, the outlet, your experience, your contribution and any security offered. Some franchise brands are better known to lenders than others, which can influence the assessment. Ownright can talk through the structure for your situation.
What costs does franchise finance usually cover?
Typical costs include the initial franchise fee, fit-out, equipment, opening stock, signage, training and working capital for the early months. Resale outlets also include goodwill and stock. The disclosure document is the best place to see the franchisor's own cost estimates.
What is a franchise disclosure document?
It is a document the franchisor must give prospective franchisees at least 14 days before they sign the franchise agreement, according to the ACCC. It covers costs, supply arrangements, franchisee numbers, legal action and more. Lenders often read it closely, and so should you.
Do franchisees need their own security?
Often lenders ask for some. That could be property, equipment or a personal guarantee. Strong franchise systems and experienced operators sometimes reduce the security needed, but it varies by lender. Property security tends to widen the options.
Can I finance an existing franchise outlet?
Yes. A resale purchase is usually assessed on the outlet's trading history, the remaining franchise term, the lease and the buyer's experience. Franchisor approval of the transfer is also part of the process, so timing matters.
Can I expand to a second or third outlet?
Yes. Multi-unit owners can borrow for further outlets, usually based on the performance of the first. Lenders look at the combined business and how debts are structured across the group.
Does franchise finance work for hospitality, retail and services?
Yes, franchising spans many sectors, from food to fitness to home services. The finance structure follows the nature of the business. See our hospitality and retail pages for sector-specific points.
What if I have had a knock-back from a bank?
It is not the end. Different lenders weigh franchises differently, and some will consider the person and the security more than the brand. Tell us what happened and we will look at who else might help.