Franchise Funding 101: 5 Ways to Finance Your First Unit in 2025

For many would-be franchisees, money is the only barrier between “I wish” and “I own.” Good news: the UK offers more funding routes than ever - some at sub-6 % interest. Below are four proven ways to raise between £10,000 and £500,000 for your first franchise unit.

1. High-street bank franchise loan 🏦

NatWest, Barclays and HSBC have dedicated franchise teams.

Bank vs Typical LTV vs Term vs Security:

• NatWest - 70 % - 5–10 y - Director’s guarantee

• Barclays - 70 % - 5–10 y- 20 % cash

• HSBC - 60 % - 5–10 y - Debenture

Bring: audited accounts from franchisor, signed franchise agreement, cash-flow forecast.

2. Asset finance 🚛

Ideal for equipment-heavy brands (AutoSmart vans, Sweets & Treats vending machines). Lender owns the van/machine until final payment - reduces risk and boosts approval odds.

3. Angel investor / silent partner 👼

Trade equity for capital and expertise. Structure via LLP so partner receives share of profits without day-to-day involvement.

4. Pension-led funding (SSAS/SIPP) 🏦

Directors over 55 can lend up to 50 % of pension pot to their own limited company. Regulated; requires FCA-authorised administrator.

Funding comparison chart

Method vs Speed vs Personal risk vs Typical cost

• Bank Loan - 4–8 weeks - Personal + asset - ⭐⭐⭐⭐

• Asset Finance - 2 weeks - Asset repo only - ⭐⭐⭐

• Angel Investor - 4–12 weeks - Equity dilution - ⭐⭐

• Pension-led - 6–8 weeks - Pension at risk - ⭐

Mistakes to avoid 🚫

• Over-leveraging: Keep debt service < 35 % of forecast EBITDA.

• Ignoring franchise fees: Factor royalty and marketing levy into cash-flow.

• Skipping a buffer: Allow 20 % contingency for fit-out overruns.

Free download 📑

Grab our Franchise Budget Template (Excel)—auto-calculates debt-coverage ratio and break-even month.

Ready to match funding to the right concept? Browse franchises by investment level on Franchise Finder and start crunching numbers.