However, when it comes to securing funding to invest in a franchise business and operate within a franchise network, lenders are often prepared to take a less restrictive view. 

British Franchise Association marketing manager Tom Endean said: “Franchises that have been properly set up and are well managed have always had a significantly higher chance of start-up success than their non franchised counterparts. This has always naturally meant that the risk involved in investing in them is lower, and has particularly significance for people who need to secure finance to allow them to join a franchise network.”

But that doesn’t mean that prospective franchisees can walk into the nearest bank and expect to be offered a loan on the spot. Like all aspects of becoming a franchisee, preparation and research, and knowing where to go for the best advice are key to future success.

Mr Endean added: “If you are looking to secure finance for a franchise, your best starting point is at one of the three major banks, Lloyds TSB, NatWest /RBS or HSBC, which all have dedicated franchise departments and expert staff who understand the franchise market and recognise the opportunities and realities that the market holds.”

In considering an application for a franchise business loan, the banks will take several factors into consideration, including the prospective franchisor’s trading history, and whether they are a member of the bfa, and as such have met strict accreditation criteria and operate in compliance with the association’s code of ethics.

In the case of franchises that are less well established, but nevertheless represent a sound business opportunity, the expertise of the banks with a specialist franchise function could make all the difference to the outcome of the loan application. 

“What must always be remembered is that in all cases, franchise or not, a bank will only lend to a good business proposal. So even with a franchise, the work still needs to be done to properly prepare business plans and information to make sure the banks have the right information that they need to make an informed decision,” said Mr Endean.

For more information on investing in a franchise and raising finance, and details on all the bfa member franchises, visit www.thebfa.org