Both franchisors and franchisees are beating their revenue targets at a higher rate than the broader SME sector, according to a new survey released today.
According to the latest annual Banjo Loans SME Compass Report, 96 per cent of franchisors and 85 per cent of franchisees achieved their revenue targets in 2025. Those figures sit above the national average of 69 per cent for SMEs.
However, the research also reveals the sector is more concerned about inflation and tighter funding conditions impacting network growth this year than is the general SME market.
Ninety-one per cent of franchisors and 76 per cent of franchisees expect inflation to be an obstacle to growth over the next 12 months. In comparison 67 per cent of SMEs nationally believe inflation will be a barrier.
CEO of Banjo Loans, Guy Callaghan said “Inflation remains front of mind, and while franchises remain growth oriented with many pursuing acquisitions and network expansion, tighter funding conditions mean decisions are being made with greater scrutiny around cash flow and access to capital.”
The SME Compass data also shows 48 per cent of SMEs raised prices last year, a figure significantly higher in the hospitality sector, where 60 per cent raised prices in response to price pressures from overheads and cash flow.
Acquisition a key tool for franchise growth
The survey points to franchising’s reliance on external finance, with 85 per cent of franchisees and 91 per cent of franchisors accessing external funding.
Nearly three quarters of franchisors report franchisees’ access to finance has contributed to limiting network growth.
Franchisees typically use external finance for stock and inventory (34%), equipment and vehicles (32%) and working capital (31%).
Finance has primarily supported franchisors in their head office operations (48%) and network expansion (48%).
The survey shows acquisition remains a popular growth tool for 68 per cent of franchisees and 78 per cent of franchisors. In contrast, acquisition is part of a growth plan for just 30 per cent of SMEs overall.
“Our report showed that 70 per cent of franchisees review cash flow and funding options following major rate announcements, while 50 per cent of SMEs overall remain concerned about interest rate changes over the next 12 months,” Callaghan said.
“This suggests that while franchises are confident in the potential to expand, they plan carefully around cash flow and financing to ensure sustainable long-term growth,” he said.
The Banjo SME Compass Report 2026 surveyed more than 1000 SMEs across Australia.
