Know the Score – What you need to know about Credit Scores

Your credit score is just one of the pieces of information that lenders (and other creditors like trade suppliers or landlords) look at when considering whether to do business with you. For most people a credit score is a bit like their appendix, they’re pretty sure they’ve got one, but they’d struggle to tell you exactly what it is, and it’s never really a problem… right up to the point where it suddenly is.

Your credit score can have a significant impact on your ability to obtain any sort of debt, and as a consequence a flow-on impact in your ability to start or grow your business. In this article I’m going to try to explain a little bit about how credit scores are calculated, why they matter, and how you can keep better control of yours.

Firstly, what is a credit score? A credit score is simply a number on a scale, usually between 0 and somewhere around 1000 (depending on which company is doing the scoring). The score is just one part of a Credit Report which will also capture things like payment defaults, court actions, bankruptcies and more. Almost every lender or business that feels they’re taking credit risk on you or your business will use that score, along with other information, to decide whether you represent a good risk.

Where do credit scores come from? The overarching term is Credit Reporting Agencies, or Credit Bureaus. In practical terms across Australia and New Zealand that usually means either Equifax (formerly VEDA), Illion (formerly Dun & Bradstreet), or Centrix. These companies collect information about businesses and individuals from a variety of sources, and then charge other authorised users a fee to access that information. It’s worth noting that as an individual you generally have a right to access and correct information held about you (but they might not make it easy).

How did you get a credit score? If you’ve ever obtained any sort of credit, you’ll almost certainly have a credit score with at least one of the Credit Reporting Agencies. This could have been anything from a pay-as-you go phone, to a car loan or mortgage. The very first time this happened your file will have been created with one of the agencies. Believe it or not this is actually a good thing, because having no credit file can be seen as being just as bad as (or sometimes even worse than) having a poor credit file, particularly if you’re out of your late teens. Once you have a credit file, any new enquiries are added to it over time, building up a picture of who you borrow from, how much, and how often.

So, how is the score calculated? Scores differ between businesses and individuals, and none of the credit bureaus will tell you exactly how they calculate their particular score, but some things are fairly consistent:

General Factors – Things like your age, tenure with your current employer, and the amount of time you’ve spent at your current address can all be used as part of assessing your risk profile.

Type of credit – Some types of credit may impact scores more than others. For example, a mortgage enquiry might impact your score differently to a personal loan, and a credit card might be different again.

Number of enquiries – Often referred to as shopping patterns, the number of enquiries and the time period they occur over can impact your score. As a general rule lots of credit enquiries over a short period of a time can have a considerable negative impact on your credit score.

Defaults – This is a big one, if you’ve ever failed to pay a debt and just ignored the problem, then chances are pretty high it will eventually end up on your credit file. The size of the debt, how long ago it was, and what sort of business it was owed to, can all impact your credit score to a greater or lesser degree. The biggest impact however will come from whether the debt was eventually paid or not. Into this category I’d also add things like court writs or default judgements.

And then came Comprehensive Credit Reporting. As you might have gleaned, a significant portion of credit reporting is about things that may reduce your credit score, or what might be termed ‘black marks’ on a credit file, however that is starting to change. Although it’s been around a while (since 2012 for NZ and 2014 for Australia), Comprehensive Credit Reporting (or CCR for short) is still in its infancy. CCR allows for much more information to be collected and shared by credit bureaus, theoretically to give a more balanced view of an individual’s credit history.

With CCR information such as whether you actually obtained credit (rather than just knowing you applied for it), as well as payment history and credit limits can be shared. This is meant to give greater insights into not just how much credit you’ve applied for, or where things have gone very wrong, and instead show if you’re keeping up with all of your commitments and whether you’ve currently taken on what might be considered too much debt.

So, what can you do to protect your credit score / credit file?

The most obvious thing is to make sure you don’t default on your payment obligations. If you have run into financial trouble or a dispute it’s far better to address it before the problem hits your file. Don’t just avoid debt collectors or parties you owe money to, instead try to come to some arrangement with them. Many providers will accept a negotiated settlement for a debt and refrain from listing a default by agreement.

If you do have a default on your file it will have a far greater impact on your credit score if it remains unpaid. Again, you may be able to negotiate a settlement with the party that listed the default, most businesses would rather get some of the debt paid than none of it.

Time may not heal all wounds, but it can eventually heal most things on your credit file. If you’re thinking about starting a business next year but you still have an unpaid default on your file, pay it now. The further back in history a black mark is, the less it will count against you (everyone can change right?).

Limit your shopping around. If you’re looking for finance be careful how many places you apply with, and if you’re working with a finance broker ask them how they minimise the number of enquiries on your file. Most good finance brokers will put in the effort to match your requirements with a lender that’s more likely to approve you, which can make a big difference.

You should also take care with the types of credit you apply for or obtain. Multiple enquiries from credit card providers, short-term lenders, or pay-day lenders can all negatively impact your credit score.

If you can, pay your bills on time. With CCR it’s now more important than ever to make sure that you pay your bills on time. It might not make a big difference if you drag out the bill for last Thursday’s morning tea with the café downstairs, but for things like loans and utilities you can expect they will soon be reporting your ‘Average Late Payment Days’ if they’re not already.

Whilst the scores differ somewhat between them, it’s fair to say that a score below 300 is going to be a significant impediment to obtaining most credit. 300 to 500 will be seen as poor or below average and may make some credit difficult or more expensive. 500 to 700 you’re middle of the road. And up above 700 you’re going to be considered a fairly safe bet.

If you’d like to check your own credit score, you can visit the websites for Equifax, Illion, or Centrix; generally these providers will provide individuals with their own personal credit reports free of charge. And if you do find a mistake impacting your credit file make sure you get it cleared up asap! You never know when you’ll need your credit score, but you definitely want it to be at its best when you do.

– Phil Chaplin, CEO

Business Plans – Why do financiers care? And more importantly, why should you?

There are very few finance companies that are willing to take on the risks associated with start-up businesses, and certainly most banks would rather wait until you’ve got a few years under your belt before they’re willing to consider lending you any money. So how do you go about showing you’re a good bet? It all starts with a plan.

Although I’ve never seen a business plan to fail, I’ve seen plenty that fail to plan (and there’s an old saying that those two things are pretty much the same). A good business plan can make all the difference between obtaining finance and not, but much more importantly a good business plan can be the foundation stone of turning your entrepreneurial dreams into reality. So where do you start?

Firstly, talk to your Franchisor or business advisor and find out whether they have a template you can use. There’s no sense putting all your effort into starting from scratch when what you really need to be interested in is the content. To help get you started I’ve also included a link to a simple business plan template at the end of this article.

Involve others – Don’t fear criticism, it will help you hold yourself to account. If you already have a team or key people involve them heavily in the planning process, from that first cup of coffee where you talk about the idea to the final draft. Not only will you gain useful insights, but you’ll gain commitment and set yourself up for a future where everyone feels responsible for delivering the planned outcomes.

Be realistic – I can’t stress this one enough, in all aspects of your plan you should be realistic. Include contingences (what if’s). What if it takes much longer to get started than you planned? What if your competitor gets to market first? What if you get sick or injured? Don’t just rely on everything going well. Lenders particularly see straight through overly optimistic plans and forecasts.

Keep it simple – Don’t fall into the trap of using technical jargon or itemising every paperclip in your expenses. Set out where you’ve come from (personally and as a business), what is the ownership structure, what products and services you will provide and who will buy them. How are you different from your competitors, and how will you get from where you are now to where you need to go.

Know your customers – Give some insights into the market you serve. What does your typical customer look like? How many do you need? And how big is the pond you’re fishing in? How will you grow your customer base? Explain how your products fit and attract your target market.

No business exists in a vacuum – Be realistic about who your competitors are but take some time to explain why you’re different. Competitors might be direct and indirect. If your business sells sushi rolls and the business next door sells sandwiches then you’re still competitors. You might also benefit from being so close together, for example you might both attract the lunch crowd.

People matter – Provide some insights into your key people or management structure. What experience do people bring and what is their role in the business? How many staff do you need, and have you been realistic about their costs? Don’t forget to pay yourself! If the business will be your only source of income you should include your own costs in your business plan and be realistic about what the business should pay to you, both in start-up phase and once established.

What SWOT? –  Some years ago I presented a SWOT as part of a business plan. Somebody asked me Isn’t that a bit old fashioned? Maybe, but I still haven’t found a more succinct method of setting out and focussing on your Strengths, Weaknesses, Opportunities and Threats. Perhaps most importantly I find that once you start categorising things in that way it causes you to be quite real with yourself and to test and challenge the things you think you know. Sometimes ‘Opportunities’ seems like the hardest part to get started, but don’t ignore it! Once you start thinking about all the ways you can establish, grow and improve upon your business it can be hard to stop. If you do nothing else in your plan, do a good SWOT! Actually, please don’t just do a SWOT, at least do a SWOT and a good Financial Forecast. Those two things alone can help set you up for success.

I’ve never met a forecast I didn’t like – It’s a bit of a running joke for anyone that’s seen a lot of financial forecasts, they very rarely forecast doom and gloom but will often have what we call a ‘ski-jump’ trajectory, where things start off ok, then some magic happens, and suddenly revenue and profit reach for the stars. Sometimes that does happen, but honestly it’s rare and it’s also probably not preferred. Instead, what financiers (and investors) want to see are realistic numbers, well thought out, with a contingency around key aspects such as customer numbers and revenue.

You should provide at least two years of financial forecasts with at least a Profit & Loss Statement and a Cashflow Forecast. For many, the Cashflow Forecast is an afterthought but it is perhaps the most important of all of the financial forecasts. Businesses might forecast and expect a loss in their first year, but typically when you run out of cash it’s game over.

Make sure your forecasts align to your business plan, and that your assumptions around expenses make as much sense as those made for revenue. It’s amazing how many plans forget that as you grow you’ll often need to add staff, or increase software costs, or move into bigger premises, or all of these things and more.

And that’s it (almost) – Once you’ve prepared your plan, reviewed your plan, shared your plan, tweaked your plan, it’s time to work the plan. Don’t just pop it in the drawer. You should be looking at the key aspects of your plan every month, reviewing how you’re traveling in more detail every quarter, and revising your plan every year. Your business plan is now a living and evolving roadmap to your continued success.


You can find Business Plan and SWOT Templates on our website here







Personal Branding and Why You Should Be Thinking About Yours

First impressions count, and in the first 7-17 seconds of meeting someone they have already formed. So what can you do to make sure that you make the right first impression? Ultimately it comes back to having a strong idea of what your personal brand is, and knowing how to project that when meeting others.

Personal branding is a concept that has gained traction in recent years, mostly due to the role personal branding plays on social media. Often referred to as ‘influencers’, people have built careers on the back of a strong personal brand and have gone on to launch successful businesses because of it.

You may be thinking, why is this relevant if you don’t plan on building an empire based on your personal brand? Good question. Whether you are going into an entry level office job or you’re a household name, your personal brand plays an important role in how people perceive you, and this has a significant impact on your career.

Whether we like it or not, people judge a book by its cover, so it is important to make sure that your cover truly reflects who you are as a person and what you want to present to the world. A personal brand doesn’t just have to be about image, it can be about establishing yourself as an expert in your field or building a reputation as a good leader.

It is really about linking yourself with particular values and qualities, and being able to communicate this to someone without flat out stating it. We have all heard the saying ‘It’s not what you say, but how you say it’, and when it comes to personal branding this could not be more true. When developing an opinion of someone, 93% of a person’s judgement is based upon non-verbal input – aka. body language, appearance and actions. So make sure that your visual cues reflect your message.

The opinion that someone forms in those first 17 seconds will forever influence the way they perceive you, and this can work for and against you in the world of business. The personal brand you project can help an employer establish if you are a good fit with their corporate image, or how well you may work in a particular team. So if you are going for a job or chasing a new opportunity, it’s probably a good idea to review your personal brand and make sure the message you are sending out is aligned with those opportunities.

It is important to remember that personal branding is not always about self-promotion, and is more about defining who you are as a person. Undertaking an exercise in personal branding can help you get to know yourself a little better. Some people have likely never thought about what their leadership style is, or what they want to represent. Knowing the answers to these questions is important in building self-confidence that can help you excel in your career.

So if you haven’t thought about your personal brand yet, maybe now is a good time.

Are Productivity Tools Working Against Us?

If you work in, well, any job, you have likely encountered productivity tools and software. These tools have been created to try and make our lives easier, and us more productive in the workplace. Very quickly the concept became popular, with many companies adopting at least one of the programs and encouraging its use among employees.

In order to be effective, you have to actively use the tools and make sure you integrate them into your everyday work habits. This may take a little time at the start of each week, or each day, but in the long-run the hope is that they ultimately inject more time into your day. However, if you have to schedule in time just to sort out your productivity tools, maybe they aren’t really making you more productive?

With the market for productivity tools becoming oversaturated, some people have found themselves managing 3 different task planner tools, all with slightly different roles, in a bid to be more organised. If anything, this sounds counterproductive. Now, we are certainly not claiming that you should ditch all of your productivity solutions for a good old fashioned pad and pen. However, scaling back to a level where ‘Update Productivity Tools’ isn’t something on your daily to do list, will likely benefit your task completion rates and their quality.

Everyone has their own habits and mindset when it comes to work, and if you happen to find a tool that fits into your routine, then by all means use it. However, if forcing yourself to use productivity tools is taking away from you focusing on the task at hand, maybe it’s not for you! The best question to ask is, what value does using this tool deliver add? If the answer is that it genuinely helps you keep on top of your work, stay focused during large-scale projects and reminds you of those tasks you always forget, then it is likely worth sticking with it.

If you’re looking to start using a productivity tool, there are some great ones on the market. However, it is important to shop around before committing, as setting up some of the tools can take time. Todoist is all around crowd favorite, offering a more basic ‘To-Do’ style platform, where you can establish different projects and tasks within them, and assign them to yourself or others.

You may be also looking for something that integrates the tools you already use, rather than introducing a whole new one. Platforms such as Zapier offer free integrations with some of the most commonly used workplace tools, including Gmail, Slack, Google Calendar, Todoist and thousands of others. Zapier allows you to create tasks or actions based off trigger, so that you don’t have to remember to do it yourself!

The tools we mentioned above are a small selection of what is available in the marketplace. So if you’re interested in adding a productivity tool to your daily routine be sure to do your research and find the best fit. However, if you find yourself stressing about the thought of sorting out your productivity tools at the start of every workday, maybe it is time to reconsider exactly how much value they are adding.

Looking To Get On Board The Fitness Franchising Boom?

It’s no secret that in 2018 we are seeing Australian consumers make the move to healthier lifestyles, as a result, franchises in the fitness sector are experiencing rapid growth. However, as this growth continues the market faces potential saturation, meaning that new players are moving away from the traditional gym model in order to appeal to new niches. A prime example of this innovation is the widely successful F45 franchise.

If you’re looking to take advantage of the industry’s widespread growth, CFI Finance offers an easy path to financing equipment for your start-up gym, PT Studio, or health and fitness business. As a leader in franchise equipment financing, CFI Finance has options including business loans, rental and leasing options for your franchises equipment.

Health and fitness equipment is costly and buying your equipment outright is not always feasible. Financing your commercial health and fitness equipment is a smarter choice because it allows you to spend money on marketing, advertising and promoting your business instead, giving your business a better chance of success.


How to Obtain a Business Loan, Rent or Lease Gym Equipment for Your Franchise

Leasing or renting your gym equipment, or obtaining a business loan – paying it back over time means you will pay for your equipment with the income it generates, this makes sense given the importance of retaining your capital at the start-up or expansion phase of your business.

Whether your business needs one piece of equipment or an entire fit-out of equipment for your gym, we have a solution to suit your needs. Options available include rental, leasing or business loans with just four simple steps involved in financing your gym equipment,

Step 1 – Source the gym equipment you need from a reputable supplier in Australia.

Step 2 – Submit an online application, making your choice between gym equipment leasing, flexible rental or business loan solutions.

Step 3 – We will assess your application and have you approved, normally within 24 hours.

Step 4 – We make payment to your supplier and the equipment is delivered.


Why Finance Your Commercial Gym Equipment Through CFI Finance

  • There are a number of options to choose from with contract terms ranging from 1 year to 5 years.
  • Leasing, renting or obtaining a business loan for your gym equipment allows you to retain your valuable capital.
  • We offer the best customer service. We’re available to you 24 hours a day, 7 days a week.
  • The application process couldn’t be simpler and usually takes just 10 minutes.  
  • We have you approved quickly – usually in 24 hours.
  • In most cases, no personal security is required.

An added benefit is the opportunity to pay out your contract and buy the equipment outright at any stage in the contract term.

If you’re looking to lease gym equipment, rent it or obtain a business loan to purchase your health and fitness equipment, we can help.

Should You Mortgage Your Home To Buy A Franchise?

By Kate Groom from Franchise Accounting & Tax

Thinking of buying a franchise? If so, you might be thinking of taking out a mortgage to finance the business. However, a mortgage isn’t the only way to finance a franchise. In this article, we take a look at the pros and cons of using your home as security for a business loan and consider some alternatives.


You can’t start a franchise without putting in your own money, but what if you don’t have cash in the bank? In this case, mortgaging your house can help you get started in business.

It’s true that some banks will lend money secured against a business but they will also expect you to invest your own money. So, unless you have cash savings, or shares, or property you can sell, you will need to unlock some of the cash tied up in your house.

A home mortgage isn’t the only source of finance for a business, but it will usually be the cheapest form of debt. Not only are the interest rates low (compared with, say, credit card debt) but the interest is often tax-deductible in the business.


A home mortgage may be an attractive form of finance for a franchise, but it’s important to consider the downsides before you rush out and refinance your home. For instance:

Loan repayments will add to the cost of operating the franchise. Each month the business will need to cover these payments from its revenue – and you won’t have the option of not making the payments if sales are not as good as you hope for.
You could be left with a debt once you leave the franchise. Let’s say you increase your mortgage by $200,000 to buy the franchise but only repay $100,000 before you exit the business. You now have more mortgage debt than you started out with but no business income to finance this extra loan.
And the big one people tend to be concerned about … if things don’t go well, you might have to sell your house.

If you can’t afford your mortgage payments you may have to sell your home in order to repay the loan. This is as true for a business owner as for someone who is an employee. However, a business owner may find ‘crunch time’ comes sooner. Here’s why:

If you lose your job, your first option is to find another one so you can keep paying the mortgage.

But when you own a franchise it’s not so easy to find another source of income. If you can’t afford the mortgage payments you can’t simply get another job. If the business can’t be improved or readily sold, you may need to sell your house to reduce the burden of debt.


Mortgage finance may be the obvious option but it isn’t the only way to finance your franchise. In fact, the best option may be to use several different sources of finance.

In our experience there are four common sources of finance for a franchise:

Cash. By this I mean money you have saved up to invest in a business. This might be unfashionable, but it certainly reduces the financial burden on your business.

Money from a family member.

Asset finance. Several finance companies will provide finance to lease equipment or franchise fitouts. This can be a very good option.

A small unsecured loan or a credit card.

Given the risks associated with mortgage finance, a blended approach might be a very good way to go. It may take a little time to put together a blend of finance sources, but this approach can give your business a sound financial footing and help protect your home.

Kate Groom is Client Solutions Director at Franchise Accounting & Tax: Australia’s first specialist accounting firm for franchises. This article was written by Kate and first published on

How to become a Multi-Site Franchisee

By Rachel Kurzyp

Your first franchise is booming and you’re now looking to become a multi-site franchisee, but where do you find the capital to fund your second site? And how do you ensure you don’t miss opportunities to expand your franchise?


If you’re a successful franchisee looking to expand your brand by taking on another site, there are some preparations you must do before lenders will consider funding your future business. In terms of timing, it is important to have the first store running efficiently and profitably, according to CFI Finance Managing Director, James Scurr, as lenders will want evidence that you have a proven track record with your first store before taking on additional sites.

“Having an accountant prepare your financials to ensure they demonstrate a healthy profit will go a long way in securing funding for a second or third site”, says James. “This not only shows your ability to successfully run a business, but the profit derived from the existing store will help the lender assess the serviceability of the proposed lend on the second store”.

Often franchisees use all their available capital to fund their first store. This means they may miss out on opportunities to expand and become a multi-site franchisee. One way to ensure you can take advantage of opportunities when they become available is to have access to capital.

“At CFI Finance, we fund the fit-out and equipment costs for greenfield sites and we can also free up capital by funding the used equipment in the original store”, explains James. “We can also assist you by offering a sale and lease back of the original equipment to help free up important capital”.

Another viable option for franchisees is to have their franchise system accredited. “We have an accreditation program for franchise brands where franchisees are “pre-approved” for funding”, says James. “This approval is based on a per-store basis rather than per individual. So, a franchisee can have guaranteed access to funding multiple stores simply by completing an application form and providing a copy of their driver’s license”.

One of the benefits of using a specialised financial lender like CFI Finance is that many finance products offered are 100 percent tax deductible and are ‘off balance sheet’. “This is different from many other lender products where only the interest portion of the repayments can be considered a tax deduction”, explains James.

“The idea of multi-site ownership is that revenue and profit increase, which also means that the amount of tax paid also increases. But by funding your assets with CFI Finance, you can reduce the amount of tax paid”. The same goes for using funding ‘off balance sheet’. “By not displaying the finance on your balance sheet, franchisees will still have the ability to borrow from lenders”, says James.


How to Buy a Franchise With No Money

By Noha Shaheed – Journalist, Cirrus Media

Falling short of the capital investment required for a franchise is often a dream killer for buyers. But does it need to be? We explore how you can buy a franchise with little or no money in hand.

When seeking finance, review your options and stress test the numbers.

While an individual’s suitability for a franchise model can be a deal breaker, more often than not, the capital investment required to buy-in can also be the culprit. Most hospitality franchises alone come with a six-digit upfront price tag.

So can you buy a franchise if you have no money in the bank?

James Scurr, managing director at CFI Finance says it can be done, but isn’t really looked favourably upon.

“We refer to ‘hurt money’,” this is normally cash savings contributed by the franchisee to the set-up of the business.

“If a franchisee has no capital ‘at risk’ in the business then it is too easy to walk away from the business if things get tough.”

Darryn McAuliffe, CEO of FRANdata Australia says that it’s almost impossible to buy a franchise with no money.

“Apart from the right to carry on a business using the franchise ‘system’, initial franchise fees are generally required to offset the costs of recruitment for a franchisor and initial training of the new franchisee,” he explains.

However, potential buyers who have some capital, but not enough for the full cost of the initial investment may be able to get around it.

Scurr says it is not uncommon for someone who has some savings to contribute to work with a bank or lender for the remaining money.

And there are processes in place for this type of finance.

“The acquisition can be sometimes be completed by borrowing against other assets or the equipment of the business,” says McAuliffe.

“A number of brands also have formal lending programmes in place with banks and other lenders which allows borrowing against the value of the franchise business.”


So is it a good idea to seek finance for a franchise?

This could depend on the individual.

Scurr comes from a background as a franchisee in the hospitality space, and he understands the importance of using finance to ensure there was enough capital to grow the business.

In his view, using every cent he had to pay the initial investment would not leave enough for the expenses required in the first three to six months of operating the business.

“Also, the tax benefits associated with finance in business are a great bonus,” he adds.

And it’s important to know what you’re getting into if you choose to seek finance.

“It is essential that applicants fully understand the terms of any finance being provided and are realistic in the planning they undertake to ensure those obligations can be comfortably met,” says McAuliffe.

“Lack of capital is a key cause of small business failure and potential buyers should take great care before trying to enter into a franchise arrangement with insufficient capital,” he advises.

Revise your expectations
If your funds are severely limited it’s worth considering if another option would be more suitable – holding off an investment until you have the money to hand or choosing a minimal-cost franchise option for instance.

If you decide to go ahead, it’s important to be realistic about expectations when seeking finance options. These include taking a small bank loan or family funds. Some brands have pathways to attaining finance.

Bakers Delight offers a Kick Start franchise program.

“The barrier which many of our prospective Gen Y franchisees face is access to finance, both for training and to purchase or lease a bakery,” says Julia Hewagama, franchise recruitment manager.

“To overcome this finance barrier and to support our network talent we introduced the Kick Start Franchise Program which is an internal pathway to franchise ownership.”

The program covers the same modules that external candidates complete, however, it allows for the trainees to maintain their full time employment within our network, whilst completing the program over a longer duration of time, typically between six to 12 months.

The program also requires a financial commitment from the Kick Start trainee which is held as a deposit and upon successful completion of the program the deposit goes towards their bakery purchase. However, Bakers Delight does look at their candidates’ financial capabilities before starting the program to ensure that upon completion, they have the minimum finance required for working capital.

And if candidates don’t have enough finance after the program?

“They may be in a position to lease a bakery from a multi-site operator’s portfolio at the end of the program,” explains Hewagama.


What you need to take away


  • Going into a business under-capitalised is a risk, so be realistic about your cashflow projections, review your options and stress test the numbers.
  • If it is more suitable for you to have the capital investment in hand, working as an employee of a brand where you would like to buy a franchise may be an option.


Why Spend Your Hard Earned Capital – Refurbishment Finance

Imagine: You completed your Due Diligence, all agreements were signed and you were given the keys to your franchise outlet. You’re now living the Australian dream and earning an income from it at the same time. Then, you receive notice that you need to complete a store refurbishment, with the costs to be paid by yourself.

Refurbishing your store is a fact of life in franchising. Whether it’s required under your franchise agreement or under the lease of your premises it typically occurs every 5 to 7 years. The stress and downtime of a store refurbishment is enough to put most franchisees off, however the end result can be a great looking store for you, your staff and your customers to enjoy, not to mention the financial benefits – whilst a new vibrant looking store can enjoy improved sales, the real harm of not refurbishing is the lower sales that old, outdated looking stores suffer. Some research suggests the opportunity cost can be between 20 – 30% of sales.

CFI Finance offers competitive, fast and unique solutions for franchisees to access the finance they need to buy equipment, fund fitouts and refurbishments and to acquire new or existing stores.

How Does CFI Finance Work?

CFI Finance can get the commercial equipment you need for your franchise, you simply find and choose the equipment you need from any Australian equipment supplier.

Apply online and you can then choose which equipment finance solution is right for you – a flexible rental, a fixed term lease or a business loan.

Rental: This is the most flexible business finance option available and provides funding for new or used equipment, fitouts, store refurbishments, custom equipment and franchise business re-sales. With a short 12 or 24 month minimum term, you have the ability to change your requirements without being locked into a long term contract and you can purchase the equipment at any time.

Lease: If you don’t need all of the flexibility of a rental solution and just want to own your equipment over a fixed term, then the lease solution may be for you. Providing funding for new or used equipment, fitouts, store refurbishments, custom equipment and franchise business re-sales, you can choose your preferred finance term from 3, 4 or 5 years and have the confidence of knowing you will own the assets at the end of the term.

CFI Finance Accredited franchise systems can offer additional benefits to their franchisees including access to pre-approved equipment finance for all current and prospective franchisees and more competitive rates across both rental and lease solutions.

Why CFI Finance?

You are four simple steps away from the business funding and equipment you need:
1. Submit an online application;
2. Provide a quote or invoice for the equipment you need;
3. Contracts are raised and emailed to you; and
4. Your equipment supplier is paid and the goods are delivered.

Join the list of happy CFI Finance clients including franchisees from Plus Fitness and IGA and experience the CFI Finance difference yourself.

This article was written for Business Franchise Magazine. Download the article here.

Funding A Franchise Facelift

At the end of a franchise term or lease, it is common for a business to undergo a refurbishment. This is to ensure the franchise brand is represented in the best way and keeps shopping centre managers happy as well. Franchise Buyer speaks to CFI Finance director James Scurr about finance options when it comes to refurbishing your franchise.

Franchises typically undergo a refurbishment when a lease or franchise term expires, which is usually between 5 and 7 years. This can be anything from a coat of paint to a complete fitout, as franchisors continually upgrade their image. While this can be beneficial for a franchisee, it can also be costly, and according to CFI Finance director James Scurr, it is important to do your research before signing up for finance. “When a refurbishment is approaching, franchisees need to consider how they are going to fund the cost,” James says. “The most obvious ways to do this would be using the business’s cash reserves or cashflow, applying for a bank loan or using other funders who specialise in franchise equipment and fitout finance. Or, it may be a mix or variation of all of these options.”

Franchisees need to account for the cost refurbishments throughout the term of the lease, according to James, who says it is unusual for franchisors to fund the refurbishment themselves. “Nearly every franchise agreement I have ever seen has a provision for the franchisee to undertake a refurbishment at some point in time,” he says. “This is a cost that the franchisee needs to budget for, as it would be very unusual for a franchisor or landlord to contribute to the refurbishment cost. Although I have worked with a client before, where a small sum was being contributed to the refurbishment by the franchisor, this is definitely not the norm.” James says that while turning to a bank to finance, a refurbishment may be common; it has positives and negatives.

“In a lot of instances, a bank may be able to offer the best interest rate, but the rate is just one consideration you should assess when looking at your options,” he says. “It’s no good getting a loan for the lowest possible rate on a product that doesn’t suit your business’s circumstances.” “Like any application for finance with a bank, be ready to provide a lot of supporting information for your loan to be assessed. I see many clients coming through my business for the simple reason that they see the requirements of their bank as too onerous, and they just want a fast, simple solution.”

“If you are looking for funding for a franchise refurbishment, then chances are you previously had a bank loan to fund the initial purchase. If this is the case, then it is probably paid out or close to being paid out in line with your lease or franchise agreement renewal.”

“Some franchisees may feel a little relief that their home is no longer on the line as security for the bank. Other specialist equipment and fitout funders may not require you to put your home up as collateral, so this may be a more appealing option for franchisees.” However, interest rates and security are not the only two factors to consider when researching finance options, says

“Franchisees need to choose a funding solution that best suits their needs. They need to take a number of factors into consideration like if and when they plan to sell the business,
tax advantages of the different types of funding products, profitability of their business and flexibility of the various funding products, to name a few,” he says. “For example, an instalment loan from your bank may offer the lowest repayment, but its tax advantages are limited when compared to, say, a rental or operating lease where typically the entire repayment is a 100% tax deductible expense of the business.”

“Similarly, if you are considering selling your business in the near future, then you may want a more flexible product that can easily be assigned to your prospective buyer. This can even assist in selling the business by offering the prospective franchise an avenue for taking over the contract, hence reducing the amount of capital they may need to come up to purchase the business.”

“There are lots of scenarios to consider, so my suggestion would be to call a few funders to get quotes and information on the products offered, and then if you feel you need a better
understanding of the options, then speak with your accountant.”

Click here to view this article in the Franchise Buyer online magazine.