Buying a franchise involves a unique set of financial considerations. Unlike a standalone business, you're buying into a proven system — and that gives lenders more confidence to lend, because the franchise has a track record they can assess.
Here's how franchise finance works in Australia, what lenders look for, and how to prepare your application.
How Much Does a Franchise Cost?
Franchise costs vary enormously:
| Type | Typical Total Investment |
|---|---|
| Small home-based franchise | $10,000–$50,000 |
| Service franchise (cleaning, lawn care) | $30,000–$150,000 |
| Retail or food franchise | $200,000–$500,000+ |
| Major fast food franchise | $500,000–$2M+ |
The total investment includes the franchise fee, fit-out, equipment, working capital, and training costs. Most lenders won't fund the full amount — expect to contribute at least 30–50% from your own resources.
What Lenders Look for in Franchise Finance
Unlike a new standalone business, franchise lending is assessed partly on the franchise brand itself:
- Franchisor accreditation — Some banks have approved panels for specific franchise systems. If your brand is on the panel, you may access better terms.
- Franchise performance data — Most franchisors can provide average store performance data. Lenders use this to assess serviceability.
- Your deposit/contribution — Most lenders require 30–50% from you (can be cash or equity release from property)
- Your relevant experience — Relevant industry background helps, but many franchise lenders will lend based on brand track record alone
Types of Franchise Finance
Bank Franchise Loans
ANZ, Commonwealth Bank, and NAB all have dedicated franchise banking divisions. If your franchise brand is on their approved panel, you may access up to 70% of the total investment at competitive rates.
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We work with franchise buyers and know which lenders have approved panels for the major franchise systems.
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Equipment Finance
For franchises with significant equipment costs (food service equipment, vehicles, machinery), equipment finance is often more accessible and at lower rates than a general business loan. The equipment itself is the security.
Secured Lending Against Property
If you own residential or commercial property with equity, a secured loan against that equity is often the cheapest way to fund a franchise purchase. The property is the security — the franchise itself doesn't need to be assessed as rigorously.
Franchisor Financing
Some franchisors offer vendor finance — they fund part of the purchase and you repay them over time. This can reduce how much you need to borrow from a lender. Ask the franchisor directly whether this is available.
What Documents Do You Need?
- Franchise agreement (draft or executed)
- Franchisor disclosure document
- Business plan and financial projections
- Your personal financial statement (assets, liabilities, income)
- Evidence of your cash contribution
- If existing business: 2 years' tax returns
The Business Plan and Projections
For franchise loans, your business plan projections should be based on the franchisor's provided performance benchmarks for comparable stores — not just optimistic personal estimates. Lenders trust brand-based data over individual projections.
Working with a Broker for Franchise Finance
A commercial broker who understands franchise lending knows which lenders have approved which brands, and can get faster approvals with better terms than going direct. They also know how to structure the equipment, fit-out, and working capital components separately for maximum efficiency.
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