Quick answer: Franchise finance is funding used to buy into, open, or expand a franchise — covering the franchise fee, setup costs, equipment, and working capital. Options in South Africa include banks’ dedicated franchise finance divisions, government-backed funds for specific sectors, and funding arranged through a broker like New Heights Finance, which shops your application across a panel of lenders rather than a single source.
Related: Secured business loans · Unsecured business loans
Key facts
| What it covers | Franchise fees, setup/fit-out costs, equipment, stock, and working capital |
| Common sources | Major banks’ franchise finance divisions, government-backed funds (sector-specific), private lenders via a broker |
| Typical requirement | A franchise agreement with an established, vetted franchisor |
| Who arranges it | New Heights Finance, as a broker, across a panel of lenders |
What is franchise finance?
Franchise finance is funding specifically for buying into, opening, or expanding a franchise. It’s usually assessed a little differently from a general business loan, because lenders weigh the track record and strength of the franchisor’s system — not just the individual applicant — alongside the usual factors like credit history and business plan.
What can franchise finance be used for?
- The franchise fee itself
- Store or premises fit-out and equipment
- Initial stock
- Working capital to get through the early trading period
Where can you get franchise finance in South Africa?
- Major banks run dedicated franchise finance divisions, often with pre-approved terms for specific, well-established franchise brands.
- Government-backed funds, such as sector-specific development funds, can offer favourable terms but often come with narrower eligibility criteria and longer processing times.
- A broker, like New Heights Finance, doesn’t lend directly but shops your application across a panel of lenders to find the best fit — useful if your franchise brand isn’t on a bank’s pre-approved list, or you simply want to compare more than one offer.
What do lenders look for in a franchise finance application?
- The franchisor’s track record and system strength — an established, proven franchise is generally easier to fund than a brand-new one
- Your own contribution or deposit toward the total cost
- A realistic business plan for the specific site or territory
- Your personal credit record and any relevant industry or management experience
Franchise finance vs a standard business loan
| Franchise finance | Secured business loan | Unsecured business loans | |
|---|---|---|---|
| Assessed partly on | The franchisor’s track record, not just the applicant | The asset offered as security | Turnover and trading history |
| Typical use | Buying into, opening, or expanding a franchise specifically | Any business purpose, backed by an asset | General business funding needs |
| Common sources | Banks’ franchise divisions, government funds, brokers | Broad lender panel | Broad lender panel |
FAQs
Do I need my own deposit to get franchise finance?
Most lenders expect the franchisee to contribute a portion of the total cost themselves. The exact proportion varies by lender and franchise brand.
Is it easier to get finance for a well-known franchise brand?
Generally yes — lenders often have more confidence in franchise systems with an established trading record, which can mean faster decisions or more favourable terms.
Can I get franchise finance for a brand-new franchise concept?
It’s possible but typically harder, since lenders have less of a track record to assess. Expect more scrutiny of your own business plan and experience in these cases.
Does New Heights Finance arrange franchise finance directly?
New Heights Finance, as a broker, doesn’t lend directly but matches franchise finance applications to suitable lenders on its panel — useful alongside, or instead of, a single bank’s franchise finance division.
Looking to fund a franchise? Get in touch with New Heights Finance to compare your options.