Quick answer
Franchise finance is funding to buy into a franchise — covering the franchise fee, fit-out, equipment, opening stock and early working capital — for a new site or an existing franchised business. Lenders look at the franchise system's track record as well as your experience and contribution. It's often a mix of equipment finance, property-backed lending and, for established sites, loans sized on trading.
Key points
- Covers the fee, fit-out, equipment, stock and opening working capital.
- A strong system can help, but lenders still assess you as the operator.
- The Franchising Code of Conduct sets disclosure rules — read every document.
- Total set-up cost is usually much bigger than the franchise fee alone.
Buying a franchise is a bit like buying a recipe that’s already been tested in hundreds of kitchens. You get the brand, the system, the training and the supply chain. What you don’t get is the money to set it all up — and the full cost is almost always bigger than the franchise fee that caught your eye.
What is franchise finance?
It’s funding for becoming a franchisee: either opening a brand-new outlet or buying an existing one. A typical franchise set-up includes:
- The initial franchise fee — for the right to use the brand and system.
- Fit-out — often to the franchisor’s exact specifications. See fit-out finance.
- Equipment — kitchens, machines, vehicles, tech. See equipment finance.
- Opening stock and launch marketing, sometimes required by the franchisor.
- Working capital to carry the business until it reaches steady trading.
- Professional fees — lawyer and accountant reviews of the franchise documents.
Franchise finance is usually a package rather than a single loan: equipment finance for the gear, plus a property-backed or unsecured loan for the rest.
What do lenders look at for a franchise?
| Factor | What they’re asking |
|---|---|
| The system | How long has it run, how do other outlets perform, how many have closed? |
| The site | Location, lease terms, foot traffic or catchment |
| You | Relevant experience, management skills, personal credit |
| Your contribution | How much of your own money or equity you’re putting in |
| Security | Property equity, equipment, or the existing outlet’s trading |
| The numbers | Realistic forecasts, not just the franchisor’s best case |
Who is franchise finance good for?
- First-time business owners who want a proven model and training.
- Career changers bringing management skills from another industry.
- Existing franchisees adding a second or third outlet.
- Buyers of established outlets where trading history already exists — see business acquisition loans.
How does it work, step by step?
- Do your homework. Read the disclosure document, talk to current and former franchisees, and get legal and accounting advice.
- Cost the full set-up — not just the fee.
- Enquire with the system, the site, the total cost and your contribution. No credit check to enquire.
- Structure the package — equipment finance for gear, other funding for fit-out, fee and working capital.
- Lease and agreement. Lenders usually want the franchise agreement and lease in place before settlement.
- Fit-out, open, trade.
What are the pros and cons?
| Pros | Cons |
|---|---|
| A proven system can strengthen your application | The franchise agreement may restrict how you run things |
| Fit-out and equipment can be bundled | Total set-up cost often far exceeds the fee |
| Training and support reduce early mistakes | Ongoing royalties and marketing levies affect cash flow |
| Established outlets come with trading history | Franchisor-specified suppliers may cost more |
| Clear specs make quotes easier to get | Your personal property is often part of the security |
What should you know about the Franchising Code?
The Franchising Code of Conduct is mandatory and regulates how franchisors and franchisees deal with each other, including disclosure. According to the ACCC, the new code commenced on 1 April 2025, with some rules applying only from 1 November 2025. Franchisors must create a disclosure document with key information about the franchise. Read it carefully, ask questions, and have a lawyer who knows franchising review it. Lenders will often ask for it too. If you want a sounding board on the finance side, send us the numbers.
What does it look like in practice? (illustrative)
A former hospitality manager buys into a coffee franchise with a new site in a growing Brisbane suburb. The franchisor specifies the fit-out and equipment. She contributes savings, puts the coffee machines, grinders and refrigeration on equipment finance, and funds the fee, fit-out and three months of working capital through a property-backed loan over her apartment. Royalties and marketing levies are built into her cash-flow forecast from the start, so the repayments are tested against realistic numbers. Illustrative only.
What questions should you ask before signing?
- What’s the total investment, including fit-out, equipment, stock and working capital?
- What ongoing fees will you pay — royalties, marketing, technology, supplies?
- How have other outlets in similar locations performed, according to current franchisees?
- What happens at the end of the term — renewal, refit, exit?
- Can you sell the outlet, and on what conditions?
- Who pays for refits the franchisor requires later?
What about buying a second or third outlet?
Multi-unit franchisees are often in a strong position, because the lender can look at how your first outlet has performed under your management. Your existing trading becomes evidence. Just be careful not to stretch the whole group too thin — each new site needs its own fit-out, working capital and ramp-up period, and a slow start at one shouldn’t threaten the others.
What documents will you need?
- The franchise agreement and disclosure document
- The lease or agreement for lease
- Fit-out and equipment quotes
- Business plan and cash-flow forecast, including royalties and levies
- Evidence of your contribution and experience
- Photo ID, ABN or ACN, and property details if offering security
- For an existing outlet: its financial statements and bank statements
What are the alternatives?
- Start-up business loans — for independent businesses.
- Business acquisition loans — for buying an established outlet or independent business.
- Property-backed loans — to fund the whole package with equity.
Ready to join a system you believe in?
Franchising can be a brilliant way to own a business with a head start. We’ll help you see the full set-up cost clearly and build a funding package that leaves breathing room for the opening months.
Enquiring won’t affect your credit score — no credit check at that stage. We don’t circulate your details to a stack of lenders, and you’ll speak to a real lending specialist. Be accurate about the full set-up cost, your contribution and any security, and we’ll get the structure right first time. See if you qualify.
Frequently asked questions
Is it easier to get finance for a franchise than an independent business?
It can be, because lenders can look at how other outlets in the system perform. But they still assess your experience, contribution, security and the specific site, so a franchise isn't an automatic yes.
What does franchise finance cover?
Commonly the initial franchise fee, fit-out of the premises, equipment, opening stock, marketing launch costs and enough working capital to get through the first months.
What is the Franchising Code of Conduct?
It's a mandatory industry code that regulates conduct between franchisors and franchisees, including disclosure. The ACCC says the new code commenced on 1 April 2025, with some rules applying from 1 November 2025.
Can I finance buying an existing franchise from another franchisee?
Yes. Buying an established franchise outlet is a business acquisition, and lenders can look at that outlet's actual trading history alongside the system's performance.