Equipment loan · Franchises
Equipment loan for franchises
Franchise finance is lending to franchisees, funding the initial franchise fee, fit-out and equipment package for a new site, resales of existing franchises, and multi-site expansion within a system.
How an equipment loan works for franchises
Most systems specify an equipment package from approved suppliers — ovens and cold storage in food, machines in fitness, plant in services. Because the package is standardised, lenders can value it accurately and finance it against the assets over three to five years. Where the equipment has a genuine secondary market, this is the cheapest part of the set-up to fund. Ask us to separate the equipment from the fit-out in the structure; they deserve different terms because they have very different resale profiles.
The cash-flow pattern we plan around
A single large set-up cost before opening, then trade that ramps over six to twelve months while royalties, marketing levies and rent apply from day one.
What franchises typically fund
- Initial franchise fee and training costs
- Fit-out to franchisor specification
- Standard equipment package and opening stock
- Buying an existing franchise on resale
- Adding a second or third site
Equipment loan for franchises: the numbers
| Typical amounts | $5,000 – $5,000,000 |
|---|---|
| Term | 12–84 months |
| Indicative rates | 6.9% – 16% p.a. |
| Repayments | Monthly |
| Speed | Same day to 48 hours for low-doc |
| Documents franchises usually need | Franchise agreement and disclosure document · ABN, personal financial position and asset and liability statement · Franchisor build cost schedule or contract of sale for a resale |
Rates are indicative, change without notice and depend on the lender, product, asset, term and your credit profile at the time of application. They are not an offer of finance. Comparison rates, where shown, are true only for the example given.
Key terms
Franchise finance
Franchise finance is lending to a franchisee to fund the initial fee, fit-out, equipment and working capital of a franchised business, assessed against the franchise system’s performance data as well as the individual applicant.
Lender accreditation of a franchise system
Lender accreditation of a franchise system is a pre-assessment in which a lender reviews a franchisor’s model, agreement and site performance, allowing franchisees within that system to borrow on pre-agreed terms.
What is equipment finance?
Equipment finance is any loan or lease used to acquire business equipment, with the equipment typically serving as security. The main structures in Australia are chattel mortgages, finance leases and rentals.
Low-doc equipment finance
Low-doc equipment finance approves smaller amounts (often up to $150,000–$250,000) without full financials, relying on ABN age, GST registration, credit history and sometimes a property-owner declaration.
Questions from franchises
How is a new franchise site financed?
Franchise finance funds the initial fee, fit-out, equipment and working capital for a new site, with many lenders holding accredited franchise systems that qualify for higher loan-to-value ratios and lighter documentation because the brand’s trading history is known. The franchisor’s disclosure document and site approval are the key documents.
Can I finance buying an existing franchise?
Yes. Franchise resales are financed against the site’s trading history, goodwill and equipment, often at a high proportion of the price for accredited systems. Lenders look at the site’s financials, the lease, the franchisor’s consent and the buyer’s experience.
How do franchisees fund the ramp-up period?
A working capital component is built into the franchise loan or a line of credit covers royalties, rent and wages while trade builds over the first six to twelve months. Lenders expect this and size the facility from the franchisor’s typical ramp-up figures.
Can a first-time franchisee get finance?
Yes. First-time franchisees are financed on the strength of the system, a deposit of typically 20 to 40 per cent, a clean credit file and relevant experience, and accredited systems make approval easier. Lyft Money knows which lenders accredit which franchise brands.