Franchise finance for greenfield sites and resales.

Franchise finance is business lending structured around a franchise system, covering the initial franchise fee, the fit-out and equipment, and working capital for the first months of trading. Lenders assess the franchise brand’s track record across its network as well as your own contribution and experience, and several major banks maintain lists of accredited franchise systems with pre-agreed lending terms. For a resale, the existing store’s trading figures are assessed in the same way as a business acquisition.

Typically the franchise agreement and the franchisor’s disclosure document, your business plan and cash flow forecast, evidence of your contribution, personal financial statements, identification, and for a resale the outlet’s last two to three years of financials. Lenders also want to see the lease or licence for the premises and any franchisor approval of you as a franchisee. Your broker assembles this into the format each lender expects.

Yes, and it is usually best arranged as a package. The fit-out is often funded by a business loan or fit-out finance, the equipment by a chattel mortgage or lease secured on the equipment itself, and the franchise fee and working capital by the main loan. Structuring it this way keeps each part on the cheapest available terms. Lyft Money arranges the parts together so settlement lines up with the franchisor’s opening timetable.

Not always for accredited brands, where lenders lend partly on the strength of the system with a director’s guarantee and security over the business. For unaccredited brands, larger amounts or weaker contributions, lenders commonly ask for residential property as security. Offering property generally increases the amount funded and lowers the rate. Your broker explains what each lender will require for your brand and deal size.

Allow two to six weeks. Accredited-brand applications at the faster end, because the lender already knows the system; unaccredited brands and property-secured loans take longer. Franchisors usually set a timetable for signing, fit-out and opening, so start the finance conversation before you sign the franchise agreement. Lyft Money can pre-assess the deal so you know what is fundable before you commit to the franchisor.

Yes, acquisition finance is available, though lenders assess it more closely than a working capital loan. They typically want the target business financials, the sale contract, a handover plan and evidence you have relevant experience. Goodwill on its own is difficult to lend against, so many deals combine a cash deposit, vendor finance and a loan secured by property or the acquired assets. Franchise purchases are often assessed against the franchisor system rather than the individual site.

An accredited franchise is a system a lender has reviewed and approved for lending, based on the brand’s history, the performance of its outlets and the strength of its franchise agreement. For accredited brands, lenders typically fund a higher proportion of the setup cost, often 50 to 70 per cent, with lighter documentation and faster approval. Unaccredited or new brands can still be financed, but the lender assesses them from scratch and usually requires more contribution or security.

Expect to contribute 30 to 50 per cent of the total setup cost from your own funds for a new site, and sometimes less for an accredited brand or a resale with strong trading history. The total cost includes the franchise fee, fit-out, equipment, stock, legal costs and a working capital buffer, so the contribution is calculated on all of it, not just the franchise fee. Equity in property can count as contribution if it is offered as security.

A greenfield site is a brand-new outlet with no trading history, so the lender relies on the franchise network’s average performance and your business plan, and usually funds a smaller share of the cost. A resale is an existing outlet with its own financials, so the lender can assess actual profit and cash flow and will often lend more against it. Resales can also carry a premium for goodwill, which lenders treat cautiously.

Yes, particularly for franchise sites, professional practices and experienced operators opening a new venue. Lenders look at the operator’s background, the business plan and cash flow forecast, the lease and the contribution. The equipment portion is often the easiest part to fund for a new business because the equipment is the security. Your broker packages the fit-out with any franchise or working capital finance so the site opens on time.