Franchises in Australia have a high rate of success compared to other start-ups, and offer the benefit of small business ownership with the support of existing business networks. At Lendfin, we have access to both secured and unsecured franchise loans to help get you on the road to a successful new business.
FRANCHISE LOAN FAQ
For a secured franchise loan, you may be able to borrow up to 100% of the purchase price. For an unsecured franchise loan, borrowing is usually capped at 70% of the purchase price, however it differs between lenders and depending upon the franchise being purchased.
Lenders prefer stable franchises with a strong existing brand such as McDonalds or Fitness First, as the business model is proven and there is lower risk. Smaller franchises are also eligible for a franchise loan, however may require more financial analysis or a higher loan to value ratio to mitigate the higher risk.
Franchise loans are structured similar to regular business loans. There are fixed and variable rates available, though the loan is generally principal and interest. The main difference is that you can borrow against the goodwill of the franchise, whereas standard business loans are usually secured only by tangible assets.
Yes! In fact, it is often easier to purchase an existing franchise as financial records are available to prove the viability of the business.
Franchises have a higher rate of success than other start-ups as the brand has an established reputation in the market. Franchisors often offer training and a strong support network to assist in overcoming business challenges, as well as proven advertising strategies and marketing material.
Franchises can be limiting as the franchise agreement dictates how the business must be run. Agreements may contain restrictions on where the business can operate, how they can advertise, the suppliers that you use and the products that you sell. The reputation of a franchised business can be affected by the performance of other franchisees.
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