Finance for franchises, shaped around how you get paid.

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.

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.

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.

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.

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.

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.

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.

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.