Franchise financing in Canada

Buying a franchise is starting a business with a playbook. Lenders like playbooks: a known brand, a proven model, sales figures from other locations. That makes franchises easier to finance than most new businesses — though you still need to bring money of your own.

What needs paying for

A new franchise usually has four kinds of cost:

• The franchise fee — for the right to use the brand and system
• Leasehold improvements — building out the space to the franchisor's standards
• Equipment — kitchen, fixtures, signage, technology
• Working capital — rent, staff and stock until the location pays for itself

The franchisor's disclosure document should set out the expected total. In the seven provinces with franchise disclosure laws — Ontario, Alberta, British Columbia, Manitoba, Saskatchewan (since June 30, 2026), New Brunswick and Prince Edward Island — franchisors must give you one before you sign. Read the costs section closely, and have a franchise lawyer read the rest.

Where the money comes from

Your own money. Lenders expect the franchisee to put in a meaningful share of the total, and many franchisors set a minimum of their own. Ask both what they expect before you plan around a number.

Bank franchise programs. Canada's big banks have franchise lending teams, and many established franchise brands have arrangements with them. Ask the franchisor which lenders already finance its franchisees — it can make the process much faster.

The Canada Small Business Financing Program. Since 2022, the CSBFP can finance franchise fees and other intangible assets, along with equipment, leasehold improvements and working capital. Intangible assets and working capital together are capped at $150,000, within the program's overall limits. For many franchisees it covers most of the build-out through one bank.

BDC and Futurpreneur. BDC lends to franchisees. Futurpreneur lends to owners aged 18 to 39 starting or buying a business, and a franchise can qualify.

Franchisor financing. Some franchisors finance part of the fee or the equipment themselves, or defer the fee. Ask.

Equipment financing. Equipment financing or a lease can cover the kitchen or fixtures separately, secured by the equipment itself. See lease or loan for the difference.

What lenders look at

• The brand. How long it has been franchising in Canada, how many locations, how many have closed.
• You. Industry or management experience, personal credit and net worth.
• Your own money in. And where it came from.
• The location. The lease terms, the site, the local market.
• The numbers. A projection for this location, ideally grounded in the franchisor's figures for similar ones.

Buying an existing franchise location

Buying a location that is already trading is different: there are real sales and bank statements to read. That makes it closer to buying any business, with the franchisor's approval of you as the new owner added to the list.

Once the location is trading

After the first months, the financing needs change. A line of credit for uneven months, equipment financing for upgrades and replacements, or a term loan for a refit or a second location — all read from the location's own statements rather than projections. How to get a business loan in Canada covers the steps.