Starting a business from scratch is one of the riskiest financial endeavours you can undertake. You are testing an unproven product, in an unproven market, under a brand nobody recognises. From a bank’s perspective, the risk profile is through the roof.
Buying a franchise, however, is an entirely different game.
The Power of the Accredited List: When you purchase a franchise- whether it’s a national fitness chain, a fast-food outlet, or a commercial cleaning group- you aren't just buying a logo. You are buying a highly refined, proven operating system. Lenders know this.
In fact, major banks and specialist commercial lenders maintain Accredited Franchise Lists. If the brand you are buying is on this list, the doors to capital swing wide open.
Borrowing Against the Brand: Because the failure rate of established franchises is statistically lower than independent startups, lenders are far more generous with their terms.
- Less Security Required: For a standalone business, banks often demand your family home as collateral. For an accredited franchise, lenders are often willing to lend a high percentage of the purchase price (sometimes up to 70%) secured only against the business itself.
- Recognised Cash Flow: Lenders already know the profit margins and operational costs of the franchise model. This means they spend less time scrutinising your projections and more time approving your application.
Funding the Fit-Out and the Fee: Franchise finance is highly specialised. It needs to cover the upfront franchise fee, the shop fit-out, the required equipment, and provide working capital for your first few months of trade.
If you are looking to buy into a proven system, let’s check the accreditation lists. Speak to the Geared Finance team to structure a competitive package for your new franchise.
