Franchise Finance Questions
We've been helping people understand franchise funding since 2018. Most questions we get fall into a few categories, but every situation feels unique when it's yours. Below you'll find straightforward answers from our team.
Rhys Pemberton
Senior Franchise Finance Advisor with 11 years helping clients structure their franchise funding across retail and hospitality sectors.
Sienna Gallagher
Franchise Operations Specialist focused on helping new franchisees understand the financial requirements and ongoing obligations involved.
Most franchise agreements require between 30-40% of the total setup cost as accessible capital. But here's what often surprises people: that's not just for the franchise fee. You need working capital for your first three months, sometimes six. We typically recommend having 50% of your total first-year costs available. It gives you breathing room when things don't go exactly to plan in those early weeks.
Yes, through a Self-Managed Super Fund structure, though it's more complex than most people expect. The franchise must be purchased by your SMSF, not by you personally. You then lease it back from your fund. There are strict rules about arm's length transactions and business separation. We work with SMSF specialists because the tax and compliance requirements are genuinely complicated. Worth exploring, but don't assume it's a simple shortcut.
Franchise fees are typically 5-8% of gross revenue, paid monthly. Marketing levies add another 2-4%. These come out before you calculate your profit, which catches some people off guard. We help you model realistic revenue scenarios so you can see what these percentages actually mean in dollar terms. A franchise doing $40,000 monthly revenue might pay $2,400-$4,800 in fees and levies before covering any other costs.
Standard approval runs 3-5 weeks if your documentation is organized. Banks want to see your disclosure document, your business plan, and proof of your capital contribution. The franchise brand matters too. Well-established systems with strong performance data move faster through approval. Newer or boutique franchises require more due diligence. We start preliminary conversations with lenders before you commit to a franchise so there aren't surprises later.
This is the question people worry about but don't always ask. Your loan obligations continue regardless of franchise performance. Most franchise agreements don't include performance guarantees. We recommend building contingency plans before you sign anything. Some franchisors offer temporary support during difficult periods, but it varies dramatically by brand. Understanding your exit options and obligations upfront matters more than most people realize.
What's Included in Franchise Finance Support
People often think franchise financing is just about getting a loan approved. That's part of it, but the real work happens in understanding your complete financial picture and how it fits with franchise requirements.
We've seen too many situations where someone got loan approval but hadn't properly accounted for fit-out costs, or insurance requirements, or the three-month lag before revenue stabilizes.
- Complete capital requirement analysis including often-overlooked startup costs
- Franchise disclosure document review with focus on financial obligations
- Cash flow modeling for your first 18 months based on similar franchise performance
- Loan structure comparison across multiple lenders familiar with franchise agreements
- Working capital planning to cover the gap between opening and profitability
- Exit strategy planning because understanding your obligations matters from day one
Most of our clients spend 6-8 weeks in planning before submitting loan applications. That timeline frustrates some people who want to move faster. But franchise agreements are long-term commitments with significant financial obligations. Getting the structure right from the beginning saves considerable stress later.
How Franchise Finance Actually Works
The process isn't complicated, but it does require patience and attention to detail at each stage.
Initial Assessment
We review your financial position, the franchise you're considering, and whether the numbers actually work for your situation. This conversation rules out mismatches early before you invest time in applications.
Documentation Preparation
Banks want specific information presented in specific ways. We help you compile your disclosure documents, business plan, and financial statements so they meet lender requirements the first time.
Lender Matching
Different banks have different appetites for different franchise brands. We know which lenders currently favor your franchise category and have your application submitted to the right place.
Approval and Settlement
Once approved, we coordinate settlement timing with your franchise agreement dates. The goal is having funds available exactly when you need them, not weeks early or days late.
Still Have Questions?
These are the questions we hear most often, but your situation probably has unique aspects worth discussing. We're happy to talk through your specific franchise finance questions without obligation. Most initial conversations take 20-30 minutes and give you a clearer picture of what's realistic for your circumstances.