Most people researching a franchise start with the brand. Territory availability, royalty structure, fit-out cost, what existing franchisees say about the support.
Almost nobody starts with their own mortgage. Which is odd, because in Australian franchise lending the equity in your home is very often the thing the whole deal rests on.
Get that part wrong and the shortlist narrows for you. Get it right early and you walk into conversations with the franchisor holding a much stronger hand.
Key Takeaways
- The current Franchising Code of Conduct commenced on 1 April 2025 and sets a 14-day consideration period before a franchisor can execute the agreement
- A separate 14-day cooling-off period applies after signing, and it can be waived in limited circumstances by existing franchisees
- Business term loans for franchises are commonly secured against equity in the borrower’s residential property
- Franchise accreditation between a lender and a franchise system can materially change how the deal is assessed
- Loan terms should be matched to the remaining term of the franchise agreement and the lease
The clock starts earlier than most buyers realise
The Franchising Code of Conduct that took effect on 1 April 2025 gives you a 14-day consideration period. The franchisor cannot execute the franchise agreement until that window closes.
There is a separate 14-day cooling-off period after signing. Existing franchisees entering an agreement that is the same or substantially similar to one they already hold can opt out of disclosure and waive that cooling-off period.
One useful change worth knowing: if you make payments during the consideration period, you can request in writing that they be repaid. The Key Facts Sheet was also retired under the current Code, with its content folded into the disclosure document itself.
Fourteen days is not long to arrange finance from a standing start. It is plenty of time if the groundwork is already done.
Most franchise lending still runs through your house
Bank business term loans are the usual instrument for funding a franchise fee, initial stock, fit-out and equipment. They are generally secured against equity in the borrower’s residential property.
Overdrafts, used to smooth seasonal cash flow, are typically secured the same way. Equipment finance is the exception, since it is usually written against the equipment itself over a term matched to the useful working life of the asset.
Lenders assess all of it against the five Cs: character, capacity, capital, collateral and conditions. Collateral is where your mortgage position stops being a personal matter and becomes a business constraint.
Accreditation is the lever most buyers miss
Some franchise systems hold an accreditation with one or more lenders. Where that relationship exists, the bank already understands the model, the typical revenue profile and the failure rate.
That usually means access to franchise lending specialists, a smoother approval path and, in some situations, the ability to bring franchise assets into the security mix rather than relying purely on your property. All the major banks hold accreditations with various systems.
Ask the franchisor directly which lenders they are accredited with. It is a reasonable question and the answer tells you a lot about how established the system really is.
Two follow-up questions are worth asking as well. What loan-to-value ratio has the accredited lender typically supported for this system, and how recently was the accreditation reviewed.
An accreditation arranged years ago on the strength of a very different trading environment does not carry the same weight. Franchisors will not always volunteer that detail, but most will answer honestly if you ask plainly.
It is also worth remembering that an accreditation is a starting point rather than a ceiling. Nothing stops you taking the accredited offer to a broker and asking whether the wider market can better it.
Sort the mortgage side before you sign anything
Here is the sequencing that saves people money. Your borrowing capacity for the business is calculated on your whole position, so a refinance, a rate reduction or a restructure of your existing home loan can change what the business side will support.
Doing that after you have signed is awkward. Doing it during due diligence is simply good planning.
Best mortgage broker in Adelaide is a search worth running before you commit rather than after. Inovayt’s Adelaide team operates from Eastwood, compares more than 40 lenders and has been broking for over 15 years, which counts when your capacity depends on how the whole position is structured.
They also handle commercial loans, business overdrafts and equipment finance, so the personal and business sides can be looked at together instead of by two people who never speak to each other. The firm was named Independent Office of the Year at the 2024 Australian Broking Awards and advertises approvals in as little as four hours.
Broker services are generally at no cost to the client, since brokers are paid by the lender. That makes an early conversation a low-risk way to find out what you can actually support before you fall in love with a brand.
Match the loan term to the agreement term
This is the detail that catches experienced buyers out. Your business debt should be fully repaid by the time the franchise agreement and the lease expire.
If you take a ten-year loan against a five-year agreement with a five-year option, you are betting on a renewal that is not guaranteed. Lenders will often flag this, but not always, and the consequence lands on you rather than them.
Check both expiry dates before you settle on a loan term. Then check what happens to the debt if you decide not to renew.
What to have ready before you apply
Lenders will want a business plan, a personal asset and liability statement, financial projections, tax returns and notices of assessment, plus identification and your trust deed if you operate through a trust.
Stress test the projections before anyone else does. Model revenue thirty per cent lower and wages five per cent higher, then check whether the business still services the debt.
Get your credit file in order too. Old defaults, unused credit card limits and a car lease you forgot about all reduce what a lender will extend.
The takeaway
Franchise buyers spend months on brand due diligence and days on finance. Reversing that ratio is one of the cheapest improvements you can make to the outcome.
Know your equity position, know your accreditation options, know what your existing mortgage is doing to your capacity. Then go and pick the brand.
This article is general information only and does not take your personal circumstances into account. Speak to a licensed broker, an accountant and a franchise lawyer before making a decision.
Frequently Asked Questions
Can I fund a franchise entirely with debt?
It is rarely sensible even where a lender permits it. Most franchise purchases are funded with a mix of equity and debt, and being over-geared from day one is one of the more common paths to failure.
Does the 14-day cooling-off period always apply?
It applies to new franchisees. Existing franchisees entering an agreement that is the same or substantially similar to one they already hold with that franchisor may waive it by giving written notice.
Will using my home as security put the house at risk?
Any secured lending carries that consequence if the business cannot service the debt. It is worth asking your broker whether equipment finance or an accredited franchise facility could reduce how much property security is needed.
How early should I talk to a broker?
Before you sign the franchise agreement, and ideally before you shortlist brands. Your borrowing capacity shapes which systems are realistic, so finding out first saves months of research on options you cannot fund.
