How to Finance Buying a Franchise in Australia
Business Owners
Franchise loans · Franchise finance · Buying a franchise in Australia
A franchise purchase is not one loan. It is a sequence of deposits, facilities, lease obligations, approvals and working capital needs that starts before you sign and continues after you open. This guide covers what lenders fund, what they secure, what to check before you pay, what can still move after approval, how accreditation changes the file, and what happens when you expand, refinance, sell or exit.
Quick Answer
A franchise purchase in Australia is usually funded as several facilities matched to the fee, fit out, equipment and working capital, while the lender assesses the borrower, the franchise system, the agreement term and the security together.
Also called: franchise loan, loan to buy a franchise, franchise finance, franchise business loans, business loans for franchise.
Start where you actually are
Most people reach this page partway through a process that has already started somewhere else. Pick the line that matches you.
- Still looking at brands, nothing paidThis is the earliest point to test financeability. Establish whether the brands on your shortlist sit on a lender panel before you narrow further: does the brand affect approval.
- You have been asked to pay to hold a territoryAn early deposit can put your cash at risk before the key documents and finance position are settled. The ACCC warns that a payment made before key documents may not be refundable. Read what order the money moves in before you pay anything.
- The disclosure documents have arrivedYou are inside a legally protected fourteen day window. It is the window to get a finance answer in: the Code timetable against the finance timetable.
- Buying an existing site, contract signedTwo clocks are now running, yours and the franchisor's consent process. See new franchise or resale.
- Already committed and the numbers movedUsually the fit out came in over the valuation or the contribution has grown. Start at what a lender can actually secure.
- You already run one site and want anotherA different and usually easier assessment: buying a second or third site.
- Already trading and it is not workingThe loan does not stop when the business does. Start at what happens to the loan if the franchise does not work out.
What this guide covers
- How do franchise loans work in Australia?
- What order does the money move in when you buy a franchise?
- How much deposit do you need to buy a franchise?
- What security does a lender take on a franchise loan?
- Does the franchise brand affect your loan approval?
- Which franchise categories are easiest to finance in Australia?
- Can you get finance if this is your first business?
- Should you use the franchisor's recommended finance panel?
- How long can you borrow for on a franchise loan?
- Should you buy a new franchise or an existing one?
- How does the Franchising Code affect your finance?
- What does a franchise cost beyond the franchise fee?
- Can you use your super or a government grant to buy a franchise?
- Why do franchise loans get declined?
- What happens to your loan if the franchise does not work out?
- Frequently asked questions about franchise loans
How do franchise loans work in Australia?
A franchise loan in Australia is a set of facilities, not one loan. Lenders fund a franchise purchase in parts, each matched to a different thing you are buying, because the parts of a franchise carry very different risk and very different security. The franchise fee buys a licence. The fit out buys leasehold improvements. The equipment buys assets a lender can identify. The stock and the opening float buy working capital. One application, several facilities, assessed together.
That structure is the first thing to understand, because it explains why the question people usually ask, what interest rate do franchise loans have, is not the best first question. What you are funding decides which facilities are available to you, and that decides the shape of the deal. Business lending sits behind most of it, with equipment funded separately and premises funded separately again if you buy them.
The second thing to understand is that a lender is not only assessing you. It is assessing an agreement you did not write and cannot change. Under the Franchising Code of Conduct, franchise agreements entered into, renewed or extended on or after 1 November 2025 must give the franchisee a reasonable opportunity to make a return, during the term of the agreement, on any investment the franchisor requires (ACCC, The franchise agreement, read 27 August 2026; the obligation sits at section 44 of the Competition and Consumer (Industry Codes-Franchising) Regulations 2024). The regulator is describing the exact economics the credit team underwrites. A reasonable opportunity is not a guarantee of profit, and no lender treats it as one, but it tells you what the agreement is supposed to deliver and therefore what the file has to show.
| What you are funding | What it usually is | Typical funding source | What secures it |
|---|---|---|---|
| The initial franchise fee | A one off payment for the right to use the brand, the system and the territory for the term | Business lending, or the buyer's own contribution | Usually nothing tangible. Commonly a director guarantee, sometimes property |
| Fit out to franchisor specification | Building work, joinery, signage and services installed in premises you generally do not own | Business lending, occasionally an equipment facility on the identifiable plant | Leasehold improvements are weak security. Often supported by other assets |
| Franchisor specified equipment | Named machines, point of sale, refrigeration, vehicles | Equipment finance against each identifiable asset | The equipment itself, registered against the asset |
| Initial stock | The opening order the system requires before you trade | Working capital, or a facility drawn at handover | Typically a general security interest over the business |
| Training and opening costs | Induction, launch marketing, uniforms, licences and pre opening wages | Working capital, frequently the buyer's own funds | Rarely secured in its own right |
| Working capital to first target trading | The cash the site burns before it reaches the volumes the model assumes | An overdraft or a term facility sized at approval | General security, supported by guarantees |
| The premises, if you buy them | Freehold rather than a lease, which is a separate purchase | Commercial property lending, assessed on its own | A registered mortgage over the property |
Read that table as a map of where the finance conversation actually happens. Most buyers arrive asking about the fee, and the fee is usually the smallest and the least fundable part. Business loan terms, structures and assessment differ facility by facility, and the general mechanics of buying a business, asset versus share purchase, goodwill, vendor terms and the rest, sit in the parent guide, how to get a loan to buy a business in Australia. This page stays on what is specific to franchising. For the non finance side of the decision, the government's own overview of buying a franchise is a reasonable starting point.
What should you check in the franchise disclosure document before applying for finance?
Read the disclosure document as a lender file, not just as a legal document. It can show the setup and ongoing costs, required capital expenditure, whether earnings information is supplied, current and former franchisee contacts, franchisor solvency information, supply restrictions and the other agreements you may have to sign. Those points affect both your due diligence and the finance structure.
The ACCC says the disclosure document must include information about setup and running costs, current and former franchisees, the franchisor's solvency, future capital expenditure and supply arrangements. If earnings information is supplied, it must be included in or attached to the disclosure document; if it is not supplied, that must also be stated. Prospective franchisees should use the document to make an informed decision and obtain independent advice (ACCC, Franchise disclosure document, read 27 August 2026).
| What to pull out | Why a buyer cares | Why a lender cares |
|---|---|---|
| Total setup and ongoing costs | Shows the real cash requirement beyond the headline franchise fee | Sets the amount, facility mix and working capital requirement |
| Significant capital expenditure | Shows refits or other required spending that may land during the term | Tests whether the debt can amortise before another major funding event arrives |
| Earnings information, or the statement that none is supplied | Shows whether there is system or site earnings material to test | Determines what can support a forecast for a new site. It is evidence to assess, not a guarantee |
| Current and former franchisee contacts | Lets you test the sales story against operators who are living it or have left | Helps surface churn, transfers and operational questions before credit assessment |
| Solvency, legal action and materially relevant facts | Shows risks that sit above the individual site | Changes how much weight can safely be put on the franchise system itself |
| Supply restrictions, rebates and required related agreements | Shows where costs and contractual obligations can sit outside the headline agreement | Affects margins, cash flow, security and conditions that must be satisfied before settlement |
What documents do you need for a franchise loan in Australia?
A complete franchise finance file usually combines borrower evidence, the franchise documents, site and fit-out material, and a cash-flow case. Exact requests vary by lender and transaction, but the assessment is cleaner when those groups arrive together rather than one piece at a time.
- You and the borrowing entity. Personal and business tax information where available, assets and liabilities, existing debts, credit conduct, contribution evidence, ownership structure and details of relevant management or industry experience.
- The business case. A business plan where the lender asks for one, cash-flow forecasts, a working-capital budget and the assumptions behind the opening ramp-up.
- The franchise pack. The information statement, disclosure document, franchise agreement, franchisor approval or transfer requirements, and any related agreements that affect the business or security.
- The site and build. Lease or occupancy documents, fit-out quote, equipment schedule and quotes, landlord incentive or contribution details, builder information and the dates deposits or progress claims fall due.
- For an existing franchise. The business sale contract plus the financial statements, BAS, bank conduct and other trading evidence the lender requests for the site being acquired.
Lenders that publish their own business finance document lists ask for broadly the same core set: annual financial statements, tax information, BAS, cash-flow projections, interim management figures, the business contract of sale, lease agreements, personal tax and an assets and liabilities position, and for a new or materially changed business, a business plan. Franchise lenders then layer the franchise-specific documents above on top of that, which is why a franchise file is heavier than a standard business purchase file even when the numbers are smaller.
Which kind of franchise finance are you looking for?
The phrase franchise loan covers at least four different transactions, and only one of them is this guide. People arrive here having searched the same words for very different reasons, and the answers diverge immediately, so it is worth being clear which one you are before you read further.
| What people call it | What it actually is | Is it covered here? |
|---|---|---|
| Franchise loan, franchise finance | A franchisee borrowing to buy and open one franchised site, new or as a resale | Yes. This is the whole guide |
| Multi site or master franchise finance | A franchisee funding a second, third or subsequent site, or acquiring development rights across a region | Partly. The second site assessment is covered below; master and development rights are a different structure |
| Franchisor or network funding | The brand owner raising capital to expand the network, build company owned sites or fund a specific purpose fund | No. That is corporate and commercial funding, assessed on the franchisor's own balance sheet |
| Motor dealership franchise agreement | A vehicle dealership operating under a manufacturer's franchise agreement, with floor plan and wholesale funding | No. Dealership funding runs on entirely separate machinery |
| Financing offered by the franchisor | The franchisor itself deferring or lending part of the fee or fit out cost, rather than a third party lender | Partly. It behaves like vendor finance and affects what an outside lender will approve |
What order does the money move in when you buy a franchise?
The earliest payments in a franchise purchase are the ones least likely to be funded, and they fall due before any facility can draw. This is the single most useful thing to understand before you start, and it is often not explained clearly. Buyers plan a total number and a total facility, then discover that the sequence does not line up: the money going out starts weeks or months before the money coming in is available, and the parts that go out first are the fee, the bond and the deposits, which are exactly the parts a lender can least easily secure.
The order below is the shape of a typical new site. A resale compresses several of these into settlement, which is one reason a resale can be a cleaner funding exercise. Read it as a cashflow, not as a budget.
| Stage | What you pay | Can a facility fund it at that point? |
|---|---|---|
| Before disclosure | A deposit or expression of interest payment to hold a territory or site | Usually not. Nothing is approved and often nothing is documented. Assume this is your own cash. The ACCC cautions that a deposit paid before key documents may not be refundable, and paying before signing does not itself start the later cooling-off period |
| On or shortly before signing | The balance of the initial franchise fee | Sometimes, where an approval is in place and a term facility is structured to draw at signing. Frequently funded by the buyer because there is nothing to secure against |
| At lease or occupancy signing | The bond or bank guarantee to the landlord, plus any lease legal costs | A bank guarantee is a separate line and usually needs cash or property behind it. Budget it separately from the loan |
| Fit out, progressive | Builder deposit, then progress claims through the build | Progressively, against invoices, and against the valuation rather than the invoice total. The deposit is usually the hardest claim to fund |
| Equipment order and delivery | Supplier deposits on order, balance on delivery | Equipment finance typically settles on delivery and invoice, not on order, so the supplier deposit often sits with you in the meantime |
| Before you open | Opening stock, training, uniforms, licences, launch marketing and pre opening wages | Working capital can, once the facility is settled and the account is operating. Timing this against handover matters more than the amount |
| From first trading | Royalties, specific purpose fund contributions, rent, wages and the first loan repayments | This is what the working capital sizing was for. Repayments usually begin before the site reaches the volumes the model assumes |
Indicative practitioner sequence only. Exact payment dates, draw conditions and what a lender will fund depend on the franchise documents, supplier contracts, lender terms and transaction structure. The ACCC warning on early deposits is a regulatory point; the funding sequence is not a lender policy table.
Two consequences follow, and both are worth acting on rather than reading past. The first is that your own cash is needed earliest and the borrowed money arrives latest, so a contribution that is technically adequate can still be badly timed. The second is that the payments made before disclosure and before signing are the ones you can least easily recover if the finance answer comes back differently from what you assumed, which is the practical reason for getting a conditional answer inside the Code's waiting period rather than after it.
What can still go wrong after finance is approved but before the franchise opens?
A conditional approval does not freeze the transaction. The lease, franchisor consent, fit-out valuation, builder and equipment deposits, landlord contribution, final lender conditions and opening cash runway can all move after the credit answer has been issued. The practical job is to keep those workstreams running beside each other rather than assume approval means the money is ready to use.
| What moves | What can happen | Finance consequence |
|---|---|---|
| Lease or occupancy documents | Execution, landlord consent or final lease terms run later than expected | A lender condition stays outstanding and settlement or a draw can move with it |
| Landlord contribution or incentive | The reimbursement is paid after works or after evidence is supplied rather than when the builder wants payment | The franchisee needs a temporary cash bridge inside the opening budget rather than treating the incentive as day-one cash |
| Fit-out valuation | The completed works are attributed less value than the builder's invoice or franchisor specification | The buyer contribution increases unless another approved security or facility covers the gap |
| Builder and supplier deposits | Deposits are due before the lender's milestone or equipment-delivery trigger | Cash leaves before asset or fit-out finance can draw |
| Franchisor approval or transfer consent | The franchisor asks for more information or the approval process runs beside the lender's own conditions | The contract, consent and finance clocks can stop lining up |
| Opening date and working capital | Fit out, approvals or equipment delivery push revenue back while rent, wages and repayments get closer | A facility that funded the build can still leave the business undercapitalised on opening day |
For the lease-to-opening cash gap specifically, see the bridge costs between signing a commercial lease and opening. The principle is the same on a franchise: fund the dates, not just the total.
What is the difference between conditional approval and being ready to settle?
Conditional approval means the lender is prepared to proceed if its stated conditions are satisfied; it does not mean the money is ready to draw. Lender labels differ, so the useful question is not only whether you are approved, but which conditions remain outstanding, who controls them and what date each can realistically be satisfied.
- Initial credit view. The lender or broker has enough information to say the deal may fit policy, but valuations, final documents or detailed verification can still change the answer.
- Conditional approval. Credit has agreed subject to named items such as valuation, lease or franchise documents, security, contribution evidence, insurance, entity requirements or final financial information.
- Loan and security documents. The facility has to be documented and signed correctly, and any mortgages, guarantees or asset-security steps have to be ready.
- Ready to settle or draw. The lender's conditions have been satisfied and the legal, franchisor, lease, settlement and payment mechanics line up on the same date.
A franchise file can therefore be approved in credit and still miss settlement because the lease is unsigned, the fit-out valuation moved, the franchisor consent is outstanding, the buyer contribution changed or a supplier payment falls before the facility's draw trigger.
How much deposit do you need to buy a franchise?
There is no single deposit figure for a franchise, because the published numbers are not measuring the same thing. Search this question and you will find contributions quoted as a share of the total setup cost, as a share of the purchase price, and as a loan to value ratio against security. Those are three different denominators. A contribution that looks generous against one is thin against another, which is why the figures on the market appear to contradict each other when they mostly do not.
So the useful question is not how much, it is how much of what. Before any number means anything, you need to know which of these the person quoting it has in mind.
- Against total setup cost. The fee, the fit out, the equipment, the stock, the opening costs and the working capital, added up. This is the biggest denominator and the one franchisors tend to quote against.
- Against the purchase price. On a resale, what you pay the outgoing franchisee for the business. It excludes anything you spend after settlement, which on a tired site can be substantial.
- Against security value. A loan to value ratio measured against property or assets a lender can take, which has nothing to do with the cost of the franchise at all.
- Against the fundable portion only. Some lenders will size a facility against the identifiable assets and treat the fee and the soft costs as yours to cover, so the contribution is effectively everything the assets do not carry.
How to work out your own contribution
Your contribution is what is left after each fundable part of the purchase has been sized, so the way to get a real number is to work through the parts in order rather than to apply somebody else's percentage. The method below is the same one a broker uses to sanity check a deal before it goes anywhere. It takes an hour with the disclosure document, the fit out quote and the equipment list in front of you, and it produces a number that belongs to your deal rather than to an average.
| Step | What you are establishing | Where the answer comes from |
|---|---|---|
| 1. Total the whole spend | Fee, fit out, equipment, opening stock, training and launch, plus working capital to the volumes the model assumes. Not the headline investment figure | The disclosure document, the fit out quote, the equipment schedule and your own working capital estimate |
| 2. Separate the identifiable assets | Which line items are named, registrable equipment a lender can value and recover, as against building work and soft costs | The equipment schedule, and the chattel versus building split in the fit out quote |
| 3. Establish the valuation basis for the fit out | What the completed fit out is likely to be attributed once installed, which is what a lender funds against, rather than the invoice | The lender's valuation basis, established before the build is priced, not at the final progress claim |
| 4. Add up the security available | Property, whether yours or a supporting party's, and any assets outside the business, plus who is being asked to guarantee | Your own position, and a conversation with anyone who would be a guarantor before rather than after |
| 5. Subtract, then time it | Whole spend less what the facilities will carry, is your contribution. Then lay it against the payment sequence, because the timing constraint often bites before the total does | The facility sizing from steps 2 to 4, read against the payment order above |
In practice the contribution moves with what the lender can see and register, not with the brand's reputation. A deal with real property behind it and a clean fit out on identifiable plant needs less cash in than a deal where most of the spend disappears into leasehold improvements and a licence fee. That is the mechanism, and it is stable even when the published percentages are not.
| Factor | Lowers the cash you need to put in | Raises the cash you need to put in |
|---|---|---|
| Security outside the business | Property security available, whether yours or a supporting party's | No property and no assets outside the business |
| What the spend is made of | A high proportion going into identifiable, registrable equipment | Most of the spend going into fit out and the franchise fee |
| Trading history at the site | An established resale with real revenue at that address | A new site with no trading history at that location |
| The brand's position with lenders | A system the lender already holds an accreditation position on | A brand no lender has assessed before |
| Your own file | Clean personal and business credit, and an ABN with real history | Adverse credit conduct, or no trading entity yet |
| Time left to run | A long remaining agreement term with a matching lease term | A short remaining agreement term, or a lease that ends first |
| The fit out against valuation | A specification priced in line with what a valuer will attribute | A specification that has come in above the valuation |
Where the gap is real and the timetable is short, some buyers bridge the difference against property they already own rather than shrink the deal, using caveat lending or a second mortgage as short term cover with a defined exit. That is a tool with a cost and a deadline attached, not a substitute for a contribution, and it only makes sense where the exit is genuinely identified before you draw. For a sense of how far the true setup number can run past the headline, the site cost breakdown in what a cafe really costs to open is the closest comparable we publish.
What security does a lender take on a franchise loan?
A lender secures a franchise loan against the identifiable equipment, a general security interest over the business, director guarantees and any property available to support it. What it cannot take is the thing that makes the business valuable. The brand is the franchisor's. The system is the franchisor's. The goodwill largely attaches to the network rather than to you. On many sites the lease is held by the franchisor and sublet to the franchisee. Strip those out and what remains to secure is a shorter list than many buyers expect, which is the underwriting problem at the centre of this whole cluster.
What a lender can realistically take usually comes from this set.
- The identifiable equipment. Registrable, valued and recoverable, which can make equipment-heavy franchises easier to structure from a security perspective than asset-light service franchises.
- A general security interest over the business. Broad in theory, thin in practice once the brand and the system are excluded.
- Director guarantees. Common where the borrower is a company, which is why the personal position of the people behind the entity is often reviewed alongside the business.
- Third party or property security. A family home or investment property can materially change the security position, but it also puts that asset behind the business risk.
- The premises, if you own them. A separate purchase with its own assessment, covered in commercial property lending.
The lease position deserves its own paragraph because franchise buyers can discover its finance effect late. Where you lease or sublease the premises from the franchisor or a franchisor associate, or occupy without a lease at all, the Code requires the franchisor to give you a copy of the lease, a copy of any occupancy agreement, the information a lessor must give a lessee under the relevant state or territory retail tenancy laws, and information about any incentive or financial benefit the franchisor or associate gets because of that lease or occupancy arrangement (ACCC, Leasing and other agreements related to a franchise, page updated 12 July 2026, read 27 August 2026). Those documents are not paperwork. They tell a credit team whether your occupancy survives a dispute with the franchisor, and that answer changes what the file is worth.
If your bank offers to increase your home loan instead
An increase against your home is a different product from a business facility, not a simpler version of one, and it is worth understanding the trade before you take it. A common outcome for a first time franchise buyer is that a property-secured option is easier for the bank to assess than the business itself. That is not automatically a bad answer. Depending on the lender and structure, property-secured finance can be lower cost or quicker to arrange than higher-risk business lending, but the trade is that the property carries more of the risk.
What it does is move the whole risk onto one asset and take the franchise out of the credit assessment altogether. Nobody underwrites the brand, nobody tests the fit out valuation, and nobody sizes the working capital, because the loan is not about the business at all. That means the discipline the finance process would have imposed simply does not happen, and the shortfall that a business lender would have made you confront in advance surfaces later, secured against the house. It also uses up the security you would otherwise have had available to support the business as it grows.
A middle position is to use property security deliberately and in part, as one component of a structure rather than as the whole structure. Which security answers better on a purchase depends on the deal rather than on a rule, and we have set the comparison out separately in residential security or commercial security on a purchase.
Using equity in property you already own
Where suitable property equity is available, property-secured finance can support a larger share of a franchise purchase, and the thing to get right is which part is structural and which part is a bridge. Those are two different products doing two different jobs, and they are frequently discussed as though they were one.
The structural version is a facility secured by property, taken deliberately as part of the funding mix. Because it is secured by real property it can price differently from higher-risk business lending, and the trade is the one set out above: risk concentrates on one asset and the security is no longer available for anything else. Used in part, alongside equipment finance and a working capital line, it is often exactly the right answer.
The bridge version is different. Caveat lending and a second mortgage are short term cover against property you already own, and they exist to close a gap that has a known end date: a settlement that has moved, a fit out claim that landed above the valuation, a franchisor consent that ran long. They carry a cost and a deadline, and they only make sense where the exit is identified before you draw, not hoped for afterwards.
The failure mode is treating the second as though it were the first. A bridge with no identified exit is not cheap funding with a long runway, it is a deadline you have bought. If property equity is going to be part of the structure, decide that at the start and size it as structure. If it is covering a gap, name the exit and the date in the same conversation.
Who has to sign a guarantee?
Expect every director of the borrowing entity to be asked for a personal guarantee, and expect the question of whether a spouse or partner signs to come up wherever they have an interest in the security. Franchise agreements are usually granted to a company, and both the franchisor and the lender then look through the company to the people behind it. The franchisor typically takes guarantees under the franchise agreement, and the lender takes its own under the facility, so there are commonly two sets of obligations sitting over the same people.
The practical point is to have that conversation before an application rather than at signing. Where a property is held jointly, the party who is not involved in the business is still being asked to put the asset behind it, and that is a decision they are entitled to make with their own independent advice and their own time. Discovering it at the last minute is how otherwise sound deals stall.
Does the franchise brand affect your loan approval?
Yes. A franchise brand can materially change how a lender assesses the deal because lenders may hold internal accreditation positions on individual franchise systems. It is the one genuinely franchise specific gate in business lending. A brand that has been assessed, whose model the credit team understands and whose failure rate they have seen, moves through a different path from a brand nobody at that lender has looked at before. Buyers often do not learn this exists until they are already committed to a site, which is the wrong end of the process to find out.
Accreditation is not a rating of how good the franchise is. It is a lender's own view, formed from the franchisor's disclosure, the network's size and age, the system's economics and, above all, the lender's own history with the brand. Two lenders can hold opposite positions on the same system, and both can be defensible.
| On the file | Brand sits on a lender panel | Brand sits on no panel |
|---|---|---|
| What the credit team already knows | The model and the cost base are understood before you apply | Every question about the system is asked from scratch |
| What the assessment leans on | Network data as well as your own numbers | The file is read as a standalone small business, not as a franchise |
| A new site with no history | Can often be assessed before it has traded | Much harder to assess, and sometimes not assessable at all |
| Structure and terms | Tend to be settled positions rather than negotiated case by case | Contribution and security expectations typically rise |
| Timing | Usually faster, because the questions are already known | Unpredictable, which matters against a Code timetable that does not stretch |
Indicative practitioner comparison of how an existing lender accreditation position can change the assessment path. Accreditation policies are internal, vary by lender and can change. This table does not predict approval, contribution or timing for a particular application.
What this means practically is that brand selection is a finance decision as well as a lifestyle one. If you have narrowed to two systems and one of them is widely accredited, that is not a small difference. It changes what you have to put in, what has to be pledged and how long the answer takes. It is worth asking the question before the deposit, not after, and a broker can usually establish a brand's general position across a panel quickly.
What it means when no lender will take a position on a brand
A lender declining to accredit a system is a statement about that lender's appetite and information, not a verdict on the business, but when several lenders independently decline to take a position it is information worth pairing with your own due diligence. This is the part buyers most want a straight answer on and most rarely get, so here it is plainly.
There are ordinary reasons a good system sits on no panel. It may be young. It may be small. It may be concentrated in one state, or in a category no credit team has written before, or it may simply never have been put in front of a lender by anyone. None of those mean the franchise is a poor business, and plenty of strong systems fund perfectly well outside bank panels through specialist and non-bank lenders.
What is worth noticing is the pattern rather than any single answer. A system that lenders have written before and have since stepped back from is a different signal from one nobody has ever looked at. You will not get told which of those you are looking at, because accreditation positions are internal and lenders do not publish or explain them. What you can do is ask the franchisor directly which lenders have written deals on the system and how recently, read that against the disclosure document, and use the franchise disclosure register as a source of questions. None of this is a substitute for your own advisers, and no accreditation position tells you whether a particular site will trade.
Everything else on the file is read the way any business purchase is read, and what lenders check first on a business loan sets that out. The strategic question of whether the franchise model is the right structure at all, as against running your own independent site, is a different question again, and we have covered it in franchise versus independent.
Which franchise categories are easiest to finance in Australia?
The franchise categories that finance most easily are the ones where most of the spend lands in identifiable, registrable equipment, and the hardest are the ones where most of it goes into a fit out, a licence fee or other soft costs. That mechanism explains the difference better than a ranking of brands does, and it is a statement about security rather than about how good any category's businesses are. A lender is asking, on each category, how much of what you are about to spend it could identify, value and recover.
Which can produce a result that looks backwards at first.
| Category | Where the money mostly goes | How it tends to fund |
|---|---|---|
| Mobile, van or trailer based | A vehicle and the plant fitted to it, plus the fee. No premises, no lease, little or no fit out | Often the cleanest category to structure from an asset-security perspective. The vehicle and fitted plant are identifiable, registrable and recoverable, and there is no premises fit out to write off |
| Food and beverage, fixed site | A heavy fit out to specification, specified kitchen and refrigeration equipment, stock and a long lease | Split. The named equipment funds well on its own facility. The fit out is the drag, because it is the largest single line and the weakest security |
| Fitness and gym | Very heavy equipment, a substantial fit out and a long lease over a large floor plate | The equipment carries a lot, but the agreement term and the lease term matter more here than in most categories because the payback runs long |
| Retail, fixed site | Shopfit, signage, point of sale and opening stock | Harder than it looks. Stock is poor security and a shopfit is a leasehold improvement, so the fundable proportion is smaller than the total spend suggests |
| Service, home or office based | Mostly the franchise fee, training, systems and working capital. Sometimes a vehicle | Lowest total cost and often the hardest to secure, because there is very little to register. Frequently the largest contribution as a proportion of the spend |
| Any category where you buy the premises | The freehold, which is a separate purchase, plus everything above | Changes the answer entirely. A registered mortgage does most of the work and the rest of the structure sits behind it |
Indicative practitioner comparison based on how the underlying asset mix and security are commonly assessed. It is not a lender policy table and does not predict approval for a particular brand, site or borrower.
Lowest entry cost is not the same as easiest to finance
A low cost service franchise with almost no assets can be harder to fund, as a proportion of what it costs, than a far more expensive food site with equipment and property behind it. This is the single most useful thing in this section and it is the opposite of what the entry price suggests.
The reason is that the contribution moves with the fundable proportion, not with the total. A modest fee plus training plus a laptop has almost nothing a lender can register, so a large share of it is yours to cover even though the number is small. A heavier site with named equipment, and property available behind it, has more that a facility can carry, so the borrowed proportion can be higher even though the total is larger. Read the two together rather than reading the headline investment figure on its own, and work it through using the five step method.
What the finance friendly franchise lists are actually telling you
Most published lists of finance friendly franchises are accreditation lists, and accreditation is a lender relationship rather than a property of the category. A brand appears on those lists because lenders have written deals on that system before, which is genuinely useful information and is not the same claim as the category being easy to fund.
So read them for what they are. A brand on such a list will probably move faster with the lenders that put it there. It tells you nothing about whether that particular site will trade, what the fit out will value at, or how much you personally will have to put in. Those answers come from the category mechanics above and from the brand's accreditation position, which are two separate questions that these lists tend to merge into one.
Can you get finance if this is your first business?
You can be funded into a franchise as your first business, and it is one of the more common routes into working for yourself, but the file is assessed differently because there is no trading history to read. Many franchise buyers are in exactly this position. They have industry experience, a contribution and no trading history in the new entity, so the parts of a standard assessment that normally rely on historical business financials need different evidence.
What the lender uses instead comes from four places, and it is worth knowing which of them you can actually influence.
- The system's own data, where the brand is accredited. This is the largest single reason accreditation matters more to a first time buyer than to anyone else. On an accredited brand, network performance can stand where your own numbers would be. On an unaccredited brand, there is nothing to substitute.
- Your contribution, and where it came from. Genuine savings read differently from money that arrived last month. If part of it is a gift or a loan from family, say so early, because it changes the structure rather than the outcome.
- Security outside the business. With no trading history, outside security is often what makes the difference between a facility and a conversation.
- Relevant hands on experience. Years running the same kind of operation for somebody else carries real weight in a credit write up, and it is the part most first time buyers under sell. Set it out properly rather than leaving it as a line on a form.
One piece of sequencing is worth getting right, because it is easy and it is frequently got wrong. Set the borrowing entity up early rather than late. A brand new ABN with no registration history is a constraint for some lenders, registration takes time you may not have inside a fourteen day window, and the entity structure also affects the franchise agreement, the lease and the tax position. Decide the structure with your accountant before the disclosure documents land, not while the clock is running.
Be realistic about the shape of the answer. Without history, expect a larger contribution, expect security to matter more, and expect the working capital sizing to be scrutinised harder than anything else on the file, because the first months of a new site are where a first time operator has the least margin for error. Ongoing working capital facilities are usually easier to arrange alongside the purchase than to add later.
Should you use the franchisor's recommended finance panel?
No, you are not required to use the franchisor's recommended finance panel, and nothing stops you running your own option alongside it. The panel can be a fast route through a known system, and it is not the same thing as the whole lending market. Whether your franchise documents impose any condition connected with finance or approval is a legal question for your solicitor. From a funding perspective, the useful comparison is between what the panel can do quickly and what an independent lender search can do with your own security, structure and timetable.
What the panel actually is, is a set of relationships the franchisor has built. Those lenders hold an accreditation position on the system, their credit teams have written the model before, and the paperwork they ask for is the paperwork the franchisor already produces. That is a real advantage, particularly against a fourteen day waiting period, and particularly for a first site.
What the panel is not, is a survey of the market. It tells you what those lenders will do. It does not tell you what the market will do, and it was not assembled with your security position, your structure or your other borrowings in view, because none of those were known when it was assembled. Both of those things are true at once, which is why the useful move is to ask questions rather than to accept or refuse.
| Question to ask | Why it matters |
|---|---|
| Who is paid by whom, and how? | A referral arrangement is not a problem, and it is common. Not knowing it exists is the problem. Ask plainly and expect a plain answer |
| Is the accreditation held by the lender, or arranged through this broker? | If the position sits with the lender, other brokers can usually reach it too. If it is relationship specific, your options genuinely narrow |
| Does my choice of financier touch your approval of me in any way? | It generally should not. Getting the answer in writing removes an unspoken pressure from the rest of the process |
| Which lenders have written deals on this system, and how recently? | Tells you whether the panel is one relationship or a genuine market position, and it is a fair question at any stage |
| What happens if the panel declines me? | Establishes in advance whether there is a route on, and whether a decline affects the territory or the timetable |
| Will the fit out be valued, and on what basis? | The panel financier knows the answer for this brand's build. It is the number that most often moves late |
A practical approach is to let the panel do what it is good at while keeping a second view on structure. The panel is optimised for speed inside a known system. An independent view is optimised for your circumstances, your security and what happens after settlement, which is where the second and third site conversations start. Neither replaces the other, and running both costs you nothing but a few conversations.
How long can you borrow for on a franchise loan?
The loan term is capped by the agreement term, not by what you can afford to repay. A lender does not want a facility to outlive the contractual right to operate from the brand or the premises it assessed, so the remaining franchise-agreement term sets the outer limit and the lease term can impose a second one. Inside that ceiling, the exact term still depends on the facility, the security, the asset life and lender policy.
This is the clock that has nothing to do with you as a borrower, and it is the reason two identical applicants can be offered materially different structures on the same brand. One is buying at the start of a term. The other is buying with a few years left to run.
The middle row is the one that surprises people. A franchisee is not automatically entitled to a further term. There is a process, and there is notice, but the outcome depends on the agreement's own terms. A lender reads that plainly: a renewal you hope for is not a renewal it can lend against. If the remaining term is short, expect the term of the facility to be cut back to fit, expect amortisation to be faster, and expect the monthly commitment to be higher as a direct consequence.
Two further provisions sit in the same area and are worth knowing before you sign. Franchise agreements entered into on or after 1 November 2025 must provide for compensation for early termination where the franchisor withdraws from the Australian market, rationalises its network in Australia, or changes its distribution model in Australia (ACCC, Ending a franchise agreement, read 27 August 2026). The ACCC's current guidance says the compensation mechanism must consider lost profit from direct and indirect revenue, unamortised capital expenditure requested by the franchisor, loss of opportunity in selling established goodwill, and the costs of winding up the franchised business (ACCC, Ending a franchise agreement, read 27 August 2026). That is the closest thing in the Code to an answer to the question every fit out borrower eventually asks, which is what happens to the loan if the brand leaves.
Where the premises are leased or subleased from the franchisor, the lease term becomes a third clock, and the Code's leasing disclosure exists so you can see it before you commit (ACCC, Leasing and other agreements related to a franchise). If you hold a leasehold interest and are funding a fit out inside it, the split between what belongs to the building and what belongs to you matters for both security and tax, and funding a fit out in leased premises works through it.
A franchisee three years into a five year term wants to refinance the original fit out and equipment over a longer run to lift monthly cash flow. The equipment has useful life left, the site trades consistently, and the numbers work comfortably on paper at the longer term.
The constraint is not the numbers. With two years to run and no automatic entitlement to a further term, the credit team will not price a facility that outlives the right to operate. The realistic outcome is a shorter term that lands inside the current agreement, with the option to look again once a further term is granted and documented. The monthly commitment goes up rather than down, which is the opposite of the reason the conversation started.
The lesson generalises. If a longer term matters to you, the time to deal with it is before renewal, not after, and the franchisor's notice obligation is the trigger to have the conversation.
Should you buy a new franchise or an existing one?
An existing franchise is often easier for a lender to assess because there is real trading history at that address; a new site relies more heavily on the franchise system, your contribution, security and projected cash flow. For a lender these are two different transactions wearing one word. A new franchise is a start up with a recognisable brand attached. An existing franchise, a resale, is a going concern purchase with a franchisor sitting in the middle of it. The finance follows that split, and so does the risk.
| What changes | New franchise | Existing franchise (resale) |
|---|---|---|
| What you are buying | A licence, a territory and the right to build a site from nothing | A trading business, its equipment, its staff and the balance of a term |
| What the lender can actually assess | The system, the model and you. No trading history at that location | Real revenue, real margins and real seasonality at that address |
| What secures the loan | New equipment, a director guarantee and usually outside security | Existing equipment, a general security interest, commonly outside security as well |
| What the franchisor has to agree to | Granting the agreement and approving the site | Consenting to the transfer, which the franchisor cannot unreasonably withhold |
| Where the risk concentrates | Getting to the volumes the model assumes, and funding the burn until then | Whether the trading history you are paying for survives the change of owner |
The consent point in row four is the one that reshapes a timetable. A franchisor cannot unreasonably withhold consent to a transfer (ACCC, Selling or transferring a franchise agreement, read 27 August 2026). The ACCC also explains a specific backstop: if the franchisor has not refused in writing, the outgoing franchisee can generally assume consent after 42 days from the later of the written transfer request or, if more information was requested, the date the franchisor received the last piece of that information. That does not make every transfer a 42-day process. It means the consent clock needs to be started properly and the information request needs to be completed, while the finance approval runs beside it.
The going concern question also has a tax limb. The ATO states that the sale of an existing franchise by a franchisee may qualify as a GST free sale of a going concern (ATO, Franchising and tax, read 27 August 2026). Whether it does on your deal turns on the conditions being met, which is an accountant's call, not a broker's, and getting it wrong changes the cash you need at settlement. We have set out the general mechanics in going concern explained and defined the term in the going concern glossary entry.
Where the outgoing franchisee is carrying part of the price rather than taking it all at settlement, that is a vendor finance structure and it has its own rules, its own risks and its own effect on what a lender will approve. That sits outside this guide, in our guide to vendor finance.
Buying a second or third site
Financing an additional site can be easier to assess than the first because the existing site gives the lender real trading history in that system rather than only a network average. That can improve the quality of the evidence available to credit, although the group still has to carry the new site's ramp-up and any existing debt.
Three things move to the front of the assessment. The franchisor has to approve you for the additional territory, which is its own process with its own criteria and often its own performance requirements on the existing site. The lender looks at whether the security over the existing business is already fully committed, because a second facility usually needs something behind it. And the servicing test becomes a group test: the question is whether both sites together carry both sets of repayments through the new site's ramp up, at a point when the new one is consuming cash rather than producing it.
The practical implication is that a clean, well documented first site is the deposit for the second one. If a second site is anywhere in your plans, keep the first one's records in the shape a credit team wants to read, and have the conversation before the territory comes up rather than when it does.
Can you refinance a franchise once it has real trading history?
Yes. Once the site has real trading history, a refinance can be assessed on the business that actually exists rather than only on the opening forecast. The lender will still read the remaining franchise term, lease term, security and group cash flow, but actual BAS, financials and bank conduct can replace some of the uncertainty that sat in the original start-up application.
The reason to separate this from second-site finance is purpose. A refinance changes the existing facility stack, repayment term or security. A second-site facility asks the group to carry another ramp-up at the same time. If the first site's original short-term or property-backed structure was only meant to get the doors open, the refinance conversation belongs on the calendar before the facility becomes urgent. See the refinancing glossary for the general mechanics.
A buyer agrees terms on a resale, gets a finance approval subject to the usual conditions, and assumes the franchisor's consent is a formality that will follow. The franchisor's process asks for information the buyer has not prepared, and the request goes back and forth while the finance approval sits on a clock of its own.
Nothing has gone wrong, and nobody has behaved unreasonably. The two processes simply were not run together. The workable version starts the transfer request and the finance application in the same week, treats the franchisor's information list as a document requirement rather than an afterthought, and keeps the settlement date honest about both.
How does the Franchising Code affect your finance?
The Franchising Code creates disclosure, waiting, cooling-off and transfer rules that the finance timetable has to fit around. A new Franchising Code of Conduct took effect on 1 April 2025, with additional rules applying from 1 November 2025. The Code applies to franchise agreements entered into, transferred, renewed or extended from 1 April 2025 (ACCC, About the Franchising Code and when it applies, read 27 August 2026).
For a prospective franchisee, the core finance window is the disclosure period. The franchisor must give the information statement within 7 days after interest is expressed and before other documents. The franchise agreement, disclosure document and a copy of the Code must then be provided before entry, and after the required documents are received in final form there is a mandatory 14-day waiting period in which the agreement cannot be entered into (ACCC, Information and document obligations, read 27 August 2026).
| Timing rule | What it applies to | Finance consequence |
|---|---|---|
| Within 7 days after interest is expressed | The franchisor must give the information statement before giving the other franchising documents | A buyer can start checking the brand and likely finance structure before paying for detailed credit work |
| At least 14 days before entry | The franchise agreement, disclosure document and copy of the Code must be given in the required circumstances | The lender and broker can work from the same pack the buyer and advisers are reviewing |
| 14-day disclosure waiting period | After the required documents are received in final form, the agreement cannot be entered into during the waiting period | Use the period to test the finance structure and conditions, but do not treat it as a guaranteed lender turnaround time |
| Generally 14 days after entering the agreement | Cooling off for a new franchise agreement. Limited opt-out rules can apply in some circumstances from 1 November 2025 | Cooling off is separate from a finance condition and does not automatically unwind leases or other agreements |
| 42-day transfer consent backstop | On a transfer, consent can generally be assumed if the franchisor has not refused in writing within 42 days after the later of the request or receipt of the last requested information | Start the consent request and information process early enough to run beside the lender's conditions |
| 6 months before the end of term | The franchisor generally must notify the franchisee about extension or a new agreement, or one month where the term is under six months | A renewal decision can determine whether an existing facility can be refinanced or extended |
| Stage | Franchising position | Finance job at that stage |
|---|---|---|
| You express interest | The information statement should arrive first | Check the broad brand, security and contribution position before narrowing to a site |
| The disclosure pack arrives | The agreement, disclosure document, Code and any required related documents become the decision pack | Send the same pack to the broker and advisers. Pull out setup cost, earnings information, capex, lease and other required agreements |
| The 14-day disclosure period runs | The agreement cannot be entered into during the mandatory period after final documents are received | Get a real credit view, identify valuations and conditions, and decide whether the proposed dates are realistic |
| You enter the agreement | The cooling-off rules may apply, subject to the current limited opt-out provisions | Treat any approval as conditional until every lender condition, lease and settlement item is actually satisfied |
| You build or prepare to settle | Lease, occupancy, transfer and other related agreements can run on their own legal timetables | Match draw conditions to builder deposits, equipment delivery, landlord incentives, consent and opening cash runway |
| You transfer an existing franchise | Franchisor consent cannot be unreasonably withheld and the 42-day deemed-consent mechanism can become relevant | Run consent and lender conditions together rather than sequentially |
Should you sign the franchise agreement or lease before finance is unconditional?
Do not assume a finance approval or a franchise cooling-off right protects you from every contract you sign. Whether you should sign in your circumstances is a legal question for your solicitor. From the finance side, the safer sequence is to know exactly which lender conditions remain, which commitments are refundable or conditional, and whether the settlement, lease and fit-out dates can still move if finance does not become ready in time.
The ACCC cautions that a deposit paid before key documents may not be refundable, and its current cooling-off guidance explains that ending the franchise agreement does not automatically end a premises lease or other agreements. That is why a finance condition in a business sale contract, any lease condition, deposit terms and the franchise cooling-off provisions need to be read as separate protections rather than treated as one thing (ACCC, Franchising costs that can't be passed on; ACCC, Ending a franchise agreement, read 27 August 2026).
What happens to your money in the cooling-off period?
A cooling-off right can end the franchise agreement, but it does not automatically end every other contract you have signed. Under the current Code a franchisee may generally terminate a new franchise agreement within 14 days after entering it, although limited opt-out rules can apply. The ACCC also warns that termination rights for the franchise agreement do not automatically unwind a premises lease or other agreements (ACCC, Ending a franchise agreement, read 27 August 2026). That is why lease and finance conditions need legal review before commitment rather than after a finance problem appears.
If your finance is declined
A finance decline does not automatically release you from the franchise agreement, sale contract, lease or any other commitment. The effect depends on the actual conditions and drafting in your documents. A solicitor should review those clauses before you sign. From the finance side, the practical protection is sequencing: use the disclosure window to get a genuine credit view and treat a conditional approval as conditional until the stated conditions are satisfied.
What if something important changes while finance is being assessed?
A material change can require the commercial and finance assumptions to be checked again before you sign. The ACCC says franchisors must disclose materially relevant facts such as certain ownership changes, legal proceedings, insolvency events and changes to important intellectual property. Prospective franchisees must be told relevant new information before they sign, and disclosure documents must be reviewed for accuracy (ACCC, Information and document obligations, read 27 August 2026). If the fact changes the franchisor, the site economics, the lease or an agreement the lender relied on, send the updated material back through the credit process rather than assume the old approval still tells the whole story.
The Franchise Disclosure Register is useful for checking whether a franchisor is registered and for starting due diligence, but the ACCC warns that franchise information on the register is supplied by franchisors. Treat the register as a source of questions, not as a replacement for the disclosure document, independent legal advice or the lender's assessment.
What does a franchise cost beyond the franchise fee?
The franchise fee is only one part of the real entry cost, and on a premises-based franchise the fit out, equipment and opening cash runway can be larger. The budget needs to include fit out to specification, equipment, opening stock, training and launch costs, working capital until the site reaches a sustainable trading rhythm, and the royalties and levies that continue after opening.
Two of those categories are worth pulling apart, because the Code now says something useful about each.
- Significant capital expenditure. The disclosure document must cover why the expenditure is needed, the amount, timing and nature of it, the anticipated outcomes and benefits, and the expected risks. A franchisor must not enter an agreement unless they discuss all significant capital expenditure with the prospective franchisee and explain how that franchisee is likely to recoup it (ACCC, Disclosing significant capital expenditure, page updated 12 July 2026, read 27 August 2026). A refit obligation three years out is a funding event, and it belongs in the plan now.
- Specific purpose funds. A specific purpose fund is money set aside for a specific common purpose related to running the franchised business, and it includes what was formerly known as the marketing fund. From 1 November 2025 the franchisor must prepare an annual financial statement within four months of the end of the financial year, have it independently audited within four months unless 75 per cent of contributing franchisees vote against auditing, and give the statement to franchisees within 30 days of preparation (ACCC, Specific purpose funds for franchise businesses, page updated 12 July 2026, read 27 August 2026). Contributions to it are a fixed cost against your margin, not an optional marketing spend.
- Costs the franchisor cannot pass on. Franchisors can only pass on the legal costs of preparing, negotiating and executing the franchise agreement, and cannot include terms requiring the franchisee to pay the franchisor's costs of settling a dispute (ACCC, Franchising costs that cannot be passed on, page updated 14 October 2025, read 27 August 2026). Worth checking against what you have been invoiced.
On the funding side, the practical split is between what a lender can identify and what it cannot. The building work in a fit out generally cannot be separated and recovered. The named equipment inside it generally can, which is why the chattel and building split is not an accounting nicety but a security question, set out in the fit out chattel versus building split. Where a resale comes with usable plant, second hand assets can still be funded, with a shorter list of lenders and tighter conditions, which we cover in second hand equipment finance. And the category buyers often under-size is the one after opening: working capital in the first 90 days after takeover is the closest model we publish to how a new franchise site actually consumes cash.
How much working capital should you keep for the first months after opening?
Do not size post-opening working capital as a percentage of the franchise fee; size it to the cash-flow gap between opening day and a conservative sustainable trading month. Build a week-by-week view of rent, wages, superannuation, supplier terms, royalties, levies, loan repayments, stock replenishment and any rent-free period ending, then stress the opening date and revenue ramp rather than assuming the franchisor's target month arrives on schedule.
The important distinction is between money required to finish the site and money required to survive the first trading cycle. A facility can fully fund the approved fit out and still leave the business short if supplier deposits, payroll and rent land before customer cash settles into a normal rhythm. For a worked example of that transition, the first 90 days of cafe working capital is the closest operating model on this site. Use the cash-flow method, not the cafe numbers, for your own franchise.
How franchise payments are taxed
The tax treatment splits along the same capital and expense line as the finance. The ATO states that the franchise establishment fee or transfer fee forms part of the cost base for your franchise licence, which is a capital asset, and because these fees are a capital investment in your business they are not tax deductible. Royalty payments, interest payments and levies to the franchisor can be claimed as an expense on your annual tax return, because they are an ongoing expense in running your business (ATO, Franchising and tax, page last updated 8 November 2022, read 27 August 2026). That is general information about the treatment, not advice on your circumstances, and the deductibility of anything on your particular deal is a question for your accountant.
A new site franchisee builds to the franchisor's specification. The specification is not negotiable, the builder's price reflects it, and the finished fit out costs meaningfully more than the valuer attributes to it once installed. The lender funds against the valuation, not against the invoice.
The gap is real, it is nobody's mistake, and it was not in anyone's budget. It has to be funded from the buyer's own cash, from outside security, or from a shorter term facility with a defined exit. The version of this that ends badly is the one where it is discovered at the final progress claim.
The version that does not end badly is the one where the specification is priced and the valuation basis is understood before the agreement is signed, which is exactly what the Code's capital expenditure disclosure is there to make possible.
Can you use your super or a government grant to buy a franchise?
You generally cannot simply withdraw super to fund a franchise purchase, and there is no standard Australian Government acquisition loan specifically for buying a franchise. An SMSF can be involved in business or business-property arrangements in some circumstances, but those structures sit under superannuation law and are not a shortcut around ordinary franchise finance.
Can an SMSF own or fund the franchise business?
An SMSF is not automatically prohibited from carrying on a business, but it must comply with its trust deed, the sole-purpose test and the other SMSF investment, borrowing and related-party rules. The ATO's guidance says SMSF business activities must be allowed by the trust deed and operated for the sole purpose of providing retirement benefits, while other rules restrict related-party acquisitions, credit arrangements and in-house assets. That means "use my super to buy the franchise I will work in" is not a standard finance strategy and should be tested with an accountant or licensed superannuation adviser before any lender structure is considered.
Business real property is a separate category. The ATO explains that business real property can receive concessional treatment under the related-party rules where the statutory tests are met, including market-value and business-use requirements. That can make premises a different superannuation question from the franchise business itself (ATO, SMSF investment restrictions; ATO, SMSFR 2009/1 on business real property, read 27 August 2026). This guide does not give superannuation advice.
Is there a government loan or grant to buy a franchise?
There is no standard Australian Government loan program whose ordinary purpose is to pay the purchase price of a franchise. Government assistance is usually attached to a particular activity, location, industry or objective rather than the acquisition itself. The business.gov.au Grants and programs finder currently lets businesses filter support by location, industry, business stage and objectives such as equipment, training, employment and operational costs.
So check grants and programs for the things you will do around the purchase, but build the franchise acquisition so it stands up without assuming a grant will arrive. Treat any genuine program as a separate eligibility exercise, not as the deposit unless the program terms clearly allow that use.
Why do franchise loans get declined?
Most franchise declines come from the franchise, not from the borrower. A file can certainly fail on the borrower, the security, the agreement term or the projected cash flow, and the general reasons a business purchase loan fails, including thin servicing, short ABN history, credit conduct and an unrealistic price, apply here exactly as they do anywhere else. They are covered in the parent guide, getting a loan to buy a business. What follows is the layer on top of that: the reasons that only exist because the business is franchised.
From our broking, indicative
The franchise-specific issues below are the ones that repeatedly stop otherwise workable files in our broking. Drawn from Switchboard broking experience across Australian franchise purchases, as at 27 August 2026, these are the franchise specific reasons a file stops, in the order we see them.
- The brand sits on no lender panel. Accreditation is the one genuinely franchise specific gate, and a system nobody has assessed is read as a standalone small business rather than as a franchise.
- The remaining agreement term is shorter than the loan term sought. There is no automatic entitlement to a further term, so a renewal the borrower expects is not a term the lender can price.
- The franchisor is slow or unwilling to consent to a transfer. On a resale, a franchisor must not unreasonably withhold consent, but not unreasonably is not the same as quickly, and approvals have their own clock.
- Fit out to franchisor specification exceeds what the valuation supports. The lender funds the valuation, the builder invoices the specification, and the difference is unfunded unless it was planned for.
- Royalty and levy load leaves too little to service the debt. The model can be sound and the site can be busy, and the file still fails once the ongoing franchisor payments are taken out of the servicing calculation.
Indicative only, based on deals we have placed, and stated as direction rather than as figures. No approval likelihood is implied. Actual outcomes depend on lender policy and your circumstances at the time of application. Not financial advice.
The pattern across all five is the same. Each one is knowable before an application is submitted, and each one is expensive to discover afterwards. The agreement term is on the agreement. The accreditation position can be checked. The valuation basis for a fit out can be established before the build is priced. The royalty and levy load is in the disclosure document. None of it requires a credit decision to find out.
Two situations sit outside that pattern and are worth naming plainly. Where credit history is the obstacle rather than the franchise, the question changes shape entirely and belongs with bad credit business lending, where the assessment is about conduct and recovery rather than about the brand. And where a deal is sound but the timetable has run out, short term options including private lending exist, with a cost and a defined exit attached, and they are a bridge to a solution rather than the solution. Neither is a way around a franchise specific problem. They answer different questions.
What can you do if a franchise lender declines you?
Start by identifying whether the decline is a lender-policy problem or a deal problem before making another application. A different lender can have a different view on franchise accreditation, industry appetite, security or facility structure. It cannot make inadequate cash flow, an unaffordable contribution, a short agreement term or a genuine valuation gap disappear.
- Brand or policy decline. Another lender or specialist franchise financier may still consider the system if its policy or accreditation position is different.
- Security or valuation gap. The answer may be a larger contribution, a different asset-finance split, suitable property security or a change to the transaction, not simply another unsecured loan.
- Serviceability or working-capital shortfall. More expensive debt does not fix a business that cannot carry the repayments and opening cash burn. Rework the purchase price, contribution, facility amount or operating assumptions first.
- Timing problem. Short-term property-backed or private finance can sometimes bridge a defined timing gap, but it needs a credible exit and should not be used to disguise an underlying affordability problem.
- Missing information or poor sequencing. Complete the disclosure, lease, valuation, entity and financial evidence before deciding whether a new application is actually justified.
The objective after a decline is not to find a lender willing to say yes at any cost. It is to work out whether the first lender rejected that lender's version of the deal or whether it exposed a problem the next lender will see too.
Where a franchise is one of several things you are weighing up, the wider set of options for people running their own business sits in the business owners finance hub.
What happens to your loan if the franchise does not work out?
The loan survives the business. A franchise agreement can end, a site can close and a sale can fall through, and none of those events repay the facility or release a guarantee. That is the single fact to hold on to, because many mistakes at this point come from assuming that dealing with the franchisor also deals with the lender. They are separate contracts, on separate timetables, with separate consequences.
What follows is general information about how the pieces fit together, not advice on any particular situation. If you are in this position, a solicitor is the first call, not the last, and the Australian Small Business and Family Enterprise Ombudsman publishes best practice guidance on franchisee initiated exit that is free and worth reading before you do anything else.
| What is happening | What it does to the business | What it does to the loan and the guarantees |
|---|---|---|
| You sell and the franchisor consents | The agreement transfers to the incoming franchisee and you exit | The cleanest route. Proceeds go to discharging the facilities at settlement, and guarantees are released only once the lender is actually repaid and confirms it in writing |
| The franchisor is slow to consent, or refuses | You keep operating, or keep paying, while the transfer sits unresolved | Repayments continue throughout. A franchisor must not unreasonably withhold consent, but that is not the same as promptly, and the lender's position does not pause while it is argued |
| You propose ending the agreement early | The franchisor must give a substantive written response within 28 days | Nothing automatic. Ending the agreement does not end the facility, and unamortised fit out is the part that most often has no asset left behind it |
| The agreement reaches the end of its term | There is no automatic entitlement to a further term | This is why lenders usually try to keep the facility inside the remaining agreement and lease runway rather than rely on a renewal that has not happened |
| The franchisor exits the Australian market or restructures | Agreements entered on or after 1 November 2025 must provide for compensation for early termination in these circumstances | Compensation must take account of unamortised capital expenditure the franchisor requested, which is the closest thing in the Code to an answer on the fit out debt |
| You stop trading without selling | The site closes and the equipment is what is left | The worst outcome for the facility. Equipment finance is secured against assets that are now second hand, the general security interest covers a business no longer trading, and the guarantees remain |
The Code obligations in rows two, three and five are set out on the ACCC's pages for selling or transferring a franchise agreement and ending a franchise agreement, both read 27 August 2026, and are covered in more detail in how long you can borrow for above.
Why the lender conversation happens earlier than people think
A lender told early has options, and a lender told late has fewer. A common practical mistake is to wait for the business problem to be solved before starting the lender conversation, and it is understandable: the instinct is to fix the business first and tell the bank once there is good news. The problem is that the useful responses, restructuring a term, moving to interest only for a period, agreeing a sale window, releasing an asset to be sold, all require time and a lender that does not feel it found out last.
The same applies to the franchisor. A transfer request lodged while the site still trades is a different conversation from one lodged after it has closed, both for the franchisor's consent and for what a buyer will pay. Sequencing is most of what you control here.
What still falls due while all of this is happening
Nothing stops. Rent under the lease or occupancy agreement, royalties and specific purpose fund contributions for as long as the agreement runs, wages and superannuation, supplier accounts, and the loan repayments themselves all continue on their own schedules. Employee entitlements and superannuation in particular are not something to defer while other things are sorted out, and they sit with your accountant and a solicitor rather than with a broker.
If the underlying problem is a short term cash gap in an otherwise sound business rather than a failing one, that is a different question with different answers, and it belongs with working capital rather than here. Where credit conduct has already been affected, bad credit business lending explains how that assessment changes. Where a business is genuinely in financial difficulty, the advice you need is legal and insolvency advice from a solicitor or a registered practitioner, and no broker, including us, is the right first call for it.
Franchise finance is usually a stack of facilities rather than one generic loan, and the parts that are easiest to fund are not always the parts that cost the most. That explains why contribution, security, accreditation, agreement term, fit-out valuation and working capital all matter at once. The Franchising Code adds a second timetable: key documents must arrive before entry, a mandatory disclosure period applies, cooling off is separate, and an early deposit can still expose cash before finance is settled. Get the brand position, the remaining agreement and lease runway, the fit-out valuation basis, the lender's outstanding conditions and the opening cash requirement clear before you make commitments that depend on finance.
Key takeaway: a franchise lender is underwriting the agreement as much as the applicant, so the answers that decide your finance are in the disclosure documents before they are in your numbers.Frequently asked questions about franchise loans
Yes. Australian lenders can finance franchise purchases, but the application is usually assessed as several funding components rather than one generic loan. The lender reads the borrower and security as well as the franchise system, agreement term, site economics and the mix of fee, fit out, equipment and working capital.
You can borrow to buy a franchise, and how much depends far more on what secures the loan than on the brand you have chosen. Identifiable equipment and property security fund readily. A franchise fee and a fit out in premises you do not own are much harder to lend against, so those parts usually need a larger contribution from you. The loan to buy a business guide covers the general acquisition mechanics that apply on top of this.
Major banks do lend on franchises, and many hold internal accreditation positions on established systems that make the process faster where your brand is on their panel. Where the brand is not accredited, or the site is new with no trading history, non-bank lenders and specialist funders are often the more realistic path. The right answer depends on the brand, the security available and the timetable you are working to, which is worth establishing before you commit. Check your eligibility to see where a deal sits.
The total cost of buying a franchise in Australia is the franchise fee plus the fit out, the equipment, the opening stock, training and launch costs, and enough working capital to reach the volumes the model assumes. The fee alone is usually the smallest component. Ongoing royalties and levies then run for the life of the agreement and come out of your margin, so the setup number and the running number are two separate budgets. The real cost of opening a site is the closest comparable breakdown we publish.
Yes, and buying an existing business is generally easier to fund than starting one, because the lender can assess real trading history rather than a projection. An existing franchise, a resale, adds one step: the franchisor must consent to the transfer, and that process runs on its own clock alongside the finance approval. The general mechanics of acquisition finance, including asset versus share purchase and goodwill, are covered in full in our guide to getting a loan to buy a business.
You can still be considered for a franchise loan with adverse credit, but the assessment changes shape and the lender set narrows. Credit history affects a franchise application the same way it affects any business application, and a franchise brand does not offset it. Where there are defaults, arrears or a prior insolvency, the assessment moves away from the franchise system and onto conduct, explanation and what has changed since. We cannot say how likely any particular application is to succeed. The mechanism is explained in bad credit business loans.
There is no single franchise deposit percentage because different figures are measured against different bases, such as total setup cost, purchase price or the value of security. Work out the whole spend, separate the parts a lender can fund, then treat the unfunded amount plus timing gaps as the cash contribution your own deal needs.
Not always. Without property, the lender may rely on identifiable equipment, a general security interest over the business and director guarantees, which can reduce how much of the total spend it is willing to carry. Suitable property security can widen the structure, but it also concentrates risk on that asset.
Franchise accreditation is a lender's internal position on a particular franchise system. It can matter because a lender that already understands the system may be able to use network information in its assessment, while an unaccredited brand is more likely to be assessed from scratch as a standalone small business. Accreditation is not a guarantee that a site or borrower will be approved.
A franchise finance application usually needs borrower and entity information, contribution and security evidence, a business plan or forecast where required, the franchise disclosure and agreement documents, lease or occupancy material, fit-out and equipment quotes, and working-capital assumptions. For an existing site, expect the lender to also request trading financials and the business sale contract. Exact document requirements vary by lender and transaction.
Check the total setup and ongoing costs, required capital expenditure, earnings information or the statement that none is supplied, current and former franchisee contacts, franchisor solvency information, supply restrictions and any related agreements you must sign. Those items shape both your due diligence and the lender's view of cash flow, security and timing.
Yes, but the lender has less borrower trading history to rely on. The assessment therefore leans more heavily on the franchise system where it is understood, your contribution and security, relevant industry or management experience, the opening budget and a conservative cash-flow forecast. Set the borrowing entity and adviser structure up before the disclosure clock is running.
There is no reliable universal approval timeframe. An accredited system with a complete disclosure pack, lease or occupancy documents, fit-out pricing, equipment quotes and borrower information can move faster than a file where those pieces arrive one at a time. The Code's 14-day disclosure period is a legal decision window, not a promise that a lender will finish within 14 days.
Yes. A second or third site can be easier for a lender to assess because the existing site provides real trading history in the same system. The lender will still test whether the group can carry both sets of repayments, whether existing security is already committed and whether the franchisor has approved the additional territory or site.
From a security perspective, franchises are generally easier to structure when more of the spend goes into identifiable, registrable assets and harder when most of the spend goes into a franchise fee, soft fit out or other costs with little recoverable value. That is why the lowest entry cost is not automatically the easiest franchise to finance.
The loan does not end just because the franchise agreement ends or the site closes. Facilities, leases, supplier obligations and guarantees continue according to their own terms until they are repaid, released or otherwise dealt with. If the business is in difficulty, get legal and insolvency advice early and speak with the lender before options narrow.
Suitable property equity can be used to support a franchise purchase, subject to lender assessment and the risks of putting that property behind the business. The key distinction is between property-secured finance used deliberately as part of the long-term structure and short-term bridge finance used to cover a dated gap with a defined exit.
You generally cannot use your superannuation to buy a franchise you intend to run yourself. A self managed super fund exists to provide retirement benefits to its members, and buying and operating a trading business for the member to work in does not fit that purpose, quite apart from the restrictions on a fund acquiring assets connected with its members. The narrow exception is property: a fund may be able to hold business real property and lease it at market rates to a business a member runs, which is the premises rather than the franchise. This is superannuation law rather than credit policy, so it is a question for your accountant or a licensed superannuation adviser before it is a question for a broker.
There is no general government loan for buying a franchise in Australia. Government support for small business tends to be grants and programs attached to specific activities such as employment, energy, exporting or particular regions and industries, rather than funding for acquiring a business. It is worth checking the grants and programs finder because something may apply to what you do after you open, but the purchase itself is a commercial finance question.
No, you are not required to use the franchisor's recommended lender or finance panel, and nothing stops you doing both. A franchisor's panel is often genuinely faster, because those lenders already hold an accreditation position on the system and their credit teams know the model. It is also a set of relationships the franchisor has chosen, not a survey of the market, so it tells you what those lenders will do rather than what the market will do. Whether your franchise documents impose any condition connected with finance is a legal question for your solicitor. The questions worth asking are set out in should you use the franchisor's recommended finance panel.
FBAA Accredited
