Access to finance remains one of the franchise sector’s most persistent pressure points. David Edwards, head of strategic growth at Banjo Loans, speaks about where the gaps are, and why franchising’s unique model demands a different approach.
Australia’s franchise sector is unlike any other corner of the small business economy. With more than 1,300 systems operating across the country, franchising offers prospective owners something that’s less available to independent startups: a proven model, a support network and an established brand behind them from day one.
Yet for all that structural advantage, there’s one bottleneck the industry keeps hitting. That’s funding.
“Speed to funding and access to funding are the two things that come up again and again,” says David Edwards, who handles franchise growth at non-bank lender Banjo Loans. “And they come up at the moments that matter most.”
A sector under genuine pressure
Funding moments are arriving against an already challenging backdrop, including the new Franchising Code of Conduct introduced last year, the 4.75 per cent rise to award wages as well as the shift to payday superannuation as of 1 July 2026.
Franchising’s distinct structure means these pressures can land differently compared to independent businesses. Additionally, the relationship between franchisor and franchisee, and the way in which funders look at this relationship, can create funding complexity.
The recruitment bottleneck
For franchisors, one of the more costly funding problems doesn’t sit within their own business but with their prospective franchisees.
Recruiting franchisees is resource-intensive and not all recruitment strategies are created equal. Franchisors scope locations, develop site plans, and invest heavily in recruiting and vetting potential owners. Then, at the eleventh hour, a prospective franchisee discovers they can’t secure finance for any investment gaps. And the whole process stalls.
The major banks will often participate in franchise lending through an accreditation process. This will usually define an exposure limit per franchise system. Once a bank hits that ceiling, it can stop regardless of the quality of individual deals.
“We see a lot of lending scenarios for systems where the major banks have tapped out,” says Edwards. “They’ve reached their limit with a particular system and they’re done, even if the franchisee in front of them is perfectly viable.”
This is most acute for greenfield sites where there may be even tighter exposure caps. Most lenders won’t touch them, or if they do, they look to heavily secure their downside through real property security. But Edwards argues the logic of refusing greenfield franchise funding doesn’t hold up to scrutiny.
“A well-run franchise system does a lot of the risk mitigation work that trading history would otherwise provide – the training, the supply chain, the operational frameworks. That has real value and it should count for something in a credit assessment and subsequent lending structure.”
The implication for franchisors is direct. If prospective franchisees can access greenfield funding, recruitment pipelines move more freely and new possibilities open.
The refit cycle
Funding pressure doesn’t ease once a franchisee is established. At the turn of a franchise agreement, franchisors commonly require operators to refit to current brand standards. It’s often contractual and it can run to six figures.
The problem is timing. A franchisee who has run a profitable operation for five years may have drawn down those profits along the way. When the refit requirement lands, the cash isn’t there, even if the business is healthy.
“Neither party is wrong,” Edwards says. “The franchisor needs the network to look consistent. The franchisee has banked the profit and hasn’t kept the cash aside. It’s a cashflow timing problem, and timing problems have funding solutions.”
Reading the whole story
More broadly, Edwards argues that franchisees are sometimes poorly served by lenders whose assessment frameworks weren’t built with franchising in mind.
“An accrued ATO debt on a payment plan or the occasional dishonour… those things can happen in business. They don’t mean the operation isn’t solid. What matters is why it happened, how it was handled and what the trajectory looks like now.”
For a sector built on the principle that the right system and the right support can set a business owner up for success, it’s a philosophy that should feel familiar.
Banjo Loans offers dedicated franchise funding solutions including greenfield site finance and franchise refit loans. For more information, visit banjoloans.com/franchise-funding/
