
Franchise Loans
Buying an established franchise can save you years of marketing time and budget.


Franchising is a popular business model, with over 1,300 franchise businesses in Australia alone. If you’re planning to buy a franchise, there are a number of costs you should consider. There are also a number of financing options available, including secured and unsecured business loans.
A franchise is where the owners (the franchisors) sell their business name, logo and model to a third party (the franchisee). The franchisee is given access to an established business model, as well as assistance and training to manage their business. In return, they pay a franchise fee to the franchisor.
Franchising is a well-established and recognised way of doing business in Australia, employing more than 590,000 people and providing an estimated annual sales turnover of $182 billion. However, it can be costly, as there are both business operational costs and the franchise fee to consider. According to Griffith University’s 2016 Franchising Australia report, the average start-up cost for a new retail franchise unit was $287,500, compared to $59,750 in a non-retail franchise. This included an initial franchise fee of $31,500 in retailing, compared to $28,000 in non-retail franchises. That said, start-up costs, inclusive of franchise fees, inventories and training range from $2,500 to upwards of $1.2 million.
If you’re thinking of becoming a franchisee, there are a number of steps you need to take. These include:
Pros
Cons
There are a number of different types of franchises you can buy, across a range of industries. These include:
Depending on what you need the funds for, there are a number of business loans you can apply for. These include:
This type of loan requires an asset as collateral. Residential or commercial property can be used. You could also secure it against your franchise and get a loan term limited to the length of the franchise agreement. Longer loan terms may be available if secured by residential property.
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This loan does not require an asset as security. Borrowing amounts are lower, and loan terms can be limited to the length of the franchise agreement, around 5 to 10 years.
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This loan is designed for borrowers who can’t provide the usual proof of income. Lower documentation is required for this loan.
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With a line of credit you can borrow funds on an ongoing basis, as opposed to a single lump sum payment. This type of loan is usually used to provide working capital for your business. It can be either secured or unsecured.
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Some franchisors offer their own finance arrangements to potential franchisees.
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Here’s what you need to keep in mind when you’re comparing loans and lenders.
It may seem daunting, but there are a number of things you can do to improve your chances of approval. These include:
Before approaching a bank, it’s essential that you’re organised and have a clear plan. For help putting together a business loan application, contact a broker or ask your accountant for advice. To apply for a franchise loan, you may need to provide:
🤔 Work out what type of loan you can apply for, how much you need to borrow and what you can afford.
🔎 Start comparing lenders and loan products. Don't forget to compare interest rates, fees and eligibility criteria. You can use the comparison table on this page.
✅ Select a lender. Click “Go to site” to be directed to the lender’s page, or “More info” if you want to read about the lender.
🖨️ Organise and prepare the required documentation. This will make the application process easier.
📱 Apply. Most lenders have their applications online.
Read our review of the Good for B business loan. Find out if this green business loan is suitable for you.
Whether you're looking to grow your business, support company cash flow or purchase new equipment, Bank of Melbourne could have a loan option for you.
Whether you're looking to support cash flow, grow your business or purchase new equipment, BankSA may have a business loan option for you.
Heritage Bank's Fully Drawn Business Loan is a flexible business finance offering with both fixed and variable rate options, a high maximum loan term and no limit on borrowing power.
What you need to know if you’re applying for a business loan as a sole trader.
BOQ Business Term Loan lets you borrow from $10,000 and benefit from flexible repayment terms and access to a redraw facility.
You may be able to get better rates and loan conditions with increased flexibility, quicker decisions and better customer service through non-bank lenders.
Apply for a loan of up to $250,000 and have the approved money in your account within three days with NAB's QuickBiz Loan.
This small business loan offering from OnDeck could provide you with up to $250,000 financing in 24 hours.
Do you need finance to help your small business grow? Moula offers loans of between $5,000 and $250,000 with flexible eligibility criteria – apply online by providing your business data and find out if you've been approved in 24 hours.