How to finance a franchise in Australia

The exact mix depends on the system, your assets and the lender. What follows is how to work out your own numbers and present them well.

As a rule of thumb, expect to fund 30 to 50 per cent of the total investment from your own resources, with the remainder borrowed. Lenders want to see genuine savings, money you have accumulated, not a gift or an unsecured loan that simply becomes more debt to service.

Work from the all-in establishment cost, not the headline franchise fee: the initial fee, fit-out and equipment, initial stock, and working capital to cover the months before the site is profitable. Underfunding the working-capital line is one of the most common reasons a viable franchise fails in its first year.

• Your own savings and equity: the base of almost every deal, and the deposit lenders expect.
• Bank business loans: often secured against residential property, which usually means a lower rate but puts your home at risk, take advice before pledging it.
• Specialist franchise lending: several major banks have franchise teams that pre-assess established systems, which can speed approval and lift how much they will lend against a known brand.
• Equipment and fit-out finance: the vehicles, ovens or gym equipment can sometimes be financed separately against the assets themselves.
• Redraw or offset and family equity: cheaper than unsecured debt, but be clear-eyed about the personal risk.

• Deposit and genuine savings: how much of your own money is in the deal.
• Servicing capacity: whether projected cash flow, stress-tested, covers the repayments.
• Security: property or business assets the loan can be secured against.
• The system's track record: unit economics and survival rates across the network.
• Your experience and credit history: relevant background and a clean record help.

1. Know your all-in number, including working capital, from the disclosure document.
2. Build a simple, stress-tested cash-flow forecast an accountant has sanity-checked.
3. Gather proof of genuine savings, assets and income, and check your credit file.
4. Get the franchisor's disclosure document and, where the brand is bank-accredited, ask which lenders already assess it.
5. Speak to a broker or the bank's franchise team early, being finance-ready is often what lets you move on a territory before someone else does.

Financing is not just about getting approved. Structured well, it leaves you enough working capital and low enough repayments to survive the ramp-up, which is what actually determines whether the franchise succeeds.