Franchise lending is a $15 billion-plus market in Australia that most brokers never touch — not because the deals are complicated, but because they do not understand the structure. A broker who understands franchise finance can access a high-value niche with less competition than standard commercial lending, loyal clients who generate multiple product opportunities, and a referral network that compounds over time.
Franchise finance differs from standard business lending in one critical way — the lender assesses the brand as much as the borrower. A franchise is a proven business system operated under licence from a franchisor. The strength, track record, and financial performance of that system directly affects the risk profile of lending to any individual franchisee.
This means franchise lending involves a three-party dynamic:
Most major lenders maintain an approved franchisor register — a list of franchise systems they are comfortable lending against. If the franchisor is on the register, the application is assessed on the franchisee's merits. If they are not, most lenders will not proceed regardless of how strong the borrower appears.
A franchise purchase typically involves multiple funding components — and each one may be a separate product or facility:
A single franchise deal can involve three or four separate finance facilities — a business loan for the franchise fee, asset finance for the fitout, a working capital facility, and potentially a commercial property loan. That is three or four products from one client relationship. This is why franchise finance is disproportionately valuable for brokers who understand the full structure.
Franchise loan assessment follows a two-stage process — franchisor assessment first, franchisee assessment second.
Before assessing the borrower, the lender evaluates the franchise system:
Established systems with strong track records — Subway, Snap Fitness, Poolwerx, Jim's Group — will generally be on multiple lenders' approved registers. Newer or less established systems may only have one or two lenders willing to fund them, or may require additional security to compensate for the brand risk.
Once the franchisor is approved, the lender assesses the franchisee:
One of the most important distinctions in franchise lending is whether the franchisee is purchasing an existing operating store or opening a new location from scratch (greenfield).
The franchisee acquires a store with an established revenue history. The lender can assess actual financial performance — P&L, BAS statements, and tax returns. Lower risk from the lender's perspective because the business model is proven at that location. Typically easier to finance and at better LVR.
The franchisee opens a brand new location. Revenue projections are provided by the franchisor based on comparable stores. Higher risk — the income does not yet exist. Lenders require stronger personal security and typically more equity contribution. Franchisors with strong track records and detailed projection methodologies are easier to fund on a greenfield basis.
For brokers, franchise finance requires two capabilities that standard residential broking does not:
Before approaching any lender, a broker working on a franchise deal needs to understand the franchisor — their history, their approved lender list, their disclosure document (the Franchise Disclosure Document or FDD that franchisors are legally required to provide), and the financial projections they provide to prospective franchisees.
A franchise deal is rarely a single loan. The broker who can structure the full capital requirement — franchise fee, fitout finance, working capital, and potentially commercial property — and coordinate all facilities to settle simultaneously is far more valuable to a franchisee client than one who only arranges part of the funding.
The franchise finance niche has excellent referral source characteristics — the people who refer clients are themselves well-networked and generate multiple referrals over time:
The Commercial Finance Masterclass covers franchise finance, medical and professional lending, commercial loan structures, DSCR, private credit, and deal construction — 43 modules, $97 one-time access.
Get Instant Access — $97 →The Commercial Finance Masterclass is an independent educational resource and is not affiliated with any RTO, ASIC-licensed entity, MFAA, FBAA, or any other regulatory body. Content is for general educational purposes only and does not constitute financial, legal, credit, or investment advice. Always seek advice from a qualified finance professional before entering any franchise arrangement.