Franchise business loans in Australia: how to fund buying a franchise

Franchise business loans are finance used to buy into a franchise system: the upfront franchise fee, the fit-out, equipment and opening stock, and enough working capital to carry the business until it pays its own way. They’re also used to buy an existing franchised outlet from its current owner. Franchise business loans in Australia are assessed on two things at once — you, and the brand you’re joining.

They’re one of the purpose-based options in our guide to business loans in Australia. This page walks through what franchise finance covers, how lenders judge a system, what you’ll need to contribute and how the timing fits with the Franchising Code.

What does franchise finance cover?

Franchise finance can be structured to cover most of the costs of getting an outlet open or taking one over:

Cost	How it’s usually funded
Franchise or licence fee	Business loan, owner contribution
Fit-out of the premises	Business loan, fit-out finance, sometimes franchisor arrangements
Equipment and fixtures	Equipment finance or chattel mortgage
Vehicles	Asset finance
Opening stock	Business loan or working capital facility
Lease bond or bank guarantee	Owner funds or secured facility
Working capital for the first months	Line of credit or term loan
Purchase price of an existing outlet	Term loan, property-secured loan

Many buyers combine two or three structures: asset finance for the equipment, a term loan for the fee and fit-out, and a line of credit for early working capital. Owners with property often simplify that into one property-secured loan.

How do lenders assess a franchise?

Lenders look at the system as well as the buyer, because the system’s performance tells them how likely a new outlet is to succeed.

On the franchise system:

• How long it has operated in Australia and how many outlets it runs.
• Whether outlets are consistently profitable, and how many have closed or changed hands.
• The training, supply arrangements and marketing support the franchisor provides.
• Ongoing fees and royalties, which reduce the cash available for loan repayments.

On you:

• Your management, industry or customer-facing experience.
• Your personal contribution and any property you can offer as security.
• Your credit history and existing commitments.
• A business plan and cash-flow forecast that reflect the real fees and lease costs.

On the site:

• The lease length and options, which should comfortably outlast the loan.
• Location, foot traffic and competition.
• For an existing outlet, its actual trading history.

Our page on preparing a business plan for a loan explains how to build a forecast a lender will trust.

How much do you need to put in?

Expect to contribute something. Lenders want you to have money at risk alongside theirs, and the more unproven the outlet, the bigger that contribution tends to be. A new site in a young system usually needs the most; an existing, profitable outlet in a long-established network the least.

Property changes the picture. A loan secured by residential or commercial property can fund a much larger share of the total, because the lender is relying on the property rather than only the franchise’s prospects. Property-secured business loans through our network run from $20,000 to $5,000,000. See secured business loans for how that works.

Weighing up a franchise and not sure what a lender would expect from you? Get a realistic read on your finance before you pay any deposit — enquiring involves no credit check.

Buying a new franchise vs an existing one

	New outlet	Existing outlet
What lenders assess	Forecasts and the system’s results elsewhere	Actual trading figures, lease and history
Typical contribution	Higher	Lower, if the outlet trades well
Main risks	Ramp-up period, site performance	Paying too much, hidden issues, lease terms
Extra approvals	Franchisor approval of you as franchisee	Franchisor approval of the transfer
Documents	Disclosure document, forecast, fit-out quotes	Financials, BAS, lease, disclosure, sale contract

When buying an existing outlet, the finance looks a lot like any other business purchase. Our page on funding for buying a business covers valuation, goodwill and vendor finance in more depth.

How does the Franchising Code affect your finance timing?

A new Franchising Code of Conduct took effect on 1 April 2025, with some rules applying from 1 November 2025. According to the ACCC, franchisors must in most cases give you at least 14 days to read the disclosure document, the franchise agreement and any earnings information before you sign. There’s also a 14-day cooling-off period for new franchise agreements, which can be waived only in limited circumstances.

Use that window well:

1. Send the disclosure document and agreement to your lender early, alongside your application.
2. Get your accountant and lawyer to review them in parallel.
3. Search the franchisor’s profile on the ACCC’s free franchise disclosure register.
4. Speak with current and former franchisees about their real numbers.
5. Try to have finance approval, or at least a clear indication, before the cooling-off period ends.

What documents do lenders ask for?

• The franchise disclosure document and franchise agreement.
• The lease or offer to lease for the site.
• A business plan and cash-flow forecast, including royalties and marketing levies.
• Fit-out and equipment quotes.
• For existing outlets, two years of financials, BAS and the sale contract.
• ID, personal asset and liability statement, and recent bank statements.
• Details of any property offered as security.

The document checklist builder can generate a printable list for your situation.

Illustrative example: buying an existing outlet

Illustrative only, using round numbers and an invented brand. A couple with retail management backgrounds agree to buy an established franchised bakery for $450,000 including stock and equipment. The outlet has three years of steady figures and seven years left on its lease.

• They contribute $100,000 of savings.
• A lender approves a business loan for the balance, using the outlet’s trading history, the couple’s experience and a guarantee supported by equity in their home.
• The franchisor approves the transfer and the couple complete the system’s training before settlement.
• A small line of credit covers the first quarter’s working capital while they settle in.

If the same couple had chosen a brand-new site, the lender would likely have asked for a larger contribution, because there’d be no trading history to rely on.

What ongoing costs should your forecast include?

Lenders often see franchise forecasts that capture the upfront costs well but understate what the system takes each month. Before you settle on a loan amount, make sure your cash-flow forecast includes:

• Royalties, usually a share of sales paid to the franchisor regardless of profit.
• Marketing levies for national or regional advertising funds.
• Technology and system fees for point-of-sale, ordering and reporting software.
• Mandated suppliers, whose prices you may not be able to negotiate.
• Refurbishment obligations, where the agreement requires a refit after a set number of years.
• Rent reviews under the lease, plus outgoings.
• Wages, super and insurance, at realistic staffing levels rather than best case.

Each of these comes out before loan repayments do. A forecast that leaves comfortable room after all of them is far more persuasive to a lender — and far safer for you — than one that only works if sales hit target from week one. Run your numbers through the business loan calculator to see what repayment your forecast can genuinely carry.

Can a startup buy a franchise?

Yes — franchising is one of the more common ways a new business owner starts out, precisely because the system supplies a tested model. Lenders still treat a first-time owner cautiously, so a solid contribution, relevant experience and, ideally, property security make the difference. Our guide to startup business loans covers the wider options for new ventures.

Ready to fund your franchise?

See if you qualify for franchise finance with an enquiry that takes about a minute. We don’t do a credit check when you first ask, your details aren’t shared around a list of lenders, and someone who knows franchise lending reads your file. Tell us accurately what you’re buying, the total cost and what you can contribute, so we can line up the right lender the first time.