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Outback Jack’s Franchise Loan

What are the costs involved?

Outback Jack’s Bar & Grill has been serving up a friendly-family casual dining experience for over 10 years now and you can get a cut of the steak with an Outback Jack’s franchise loan.

The steak and seafood restaurant has strong business fundamentals that you can leverage giving you a better chance of getting approved for finance then if you were to try and finance your own restaurant.

However, you still need to put forward a strong business case and this is where a specialist mortgage broker can give you the edge.

How much can I borrow?

Do you have some past business experience, good security and a solid business plan?

Depending on your situation, there are lenders willing to help:

  • New or existing Outback Jack’s: Borrow between 50-60% of the total franchise costs or up to 100% using an existing residential property as security.
  • Loan term: Typically 10 years or the length of the franchise agreement. This is usually tied to the lease term.
  • Residential property as security: Get a longer loan term anywhere between 25 to 30 years.
  • Interest only: Typically 2 years.
  • Lenders won’t do low doc options with franchise loans.
  • Account-certified business plan and profit forecasting will be required.
  • Reduced commercial interest rates and higher LVRs available depending on your application strength.

Borrowing the amount you need at a sharp interest rate is all about choosing the right lender.

Call us on 1300 889 743 or complete our online enquiry form for a free, no obligation assessment and discover if you qualify for an Outback Jack’s franchise loan.

There are other franchises that we can help you get finance for too!

How do I apply?

As a minimum, you’ll need to provide:

  • 2 years personal tax returns.
  • 2 years business activity statements (BAS) if you were previously running a business in a similar industry.
  • Evidence of a credit file free of defaults or bankruptcy.

Lenders still need more but don’t worry, we can help.

It comes down to your character: we trust your skills and experience but the banks don’t so give us everything you can including business references from your past employment in a similar industry and how you plan to make your franchise successful.

You don’t necessarily need to have been in the restaurant game but you’ll need to provide business financials of how you were to successfully run a business in a similar industry like a cafe.

The lender can typically gather capital expenditure and profit forecasting from the franchisor, in this case, Outback Jack’s.

In regards to your own capital, you’ll generally need 30-50% of the franchise costs as a deposit for the Outback Jack’s franchise loan.

You can avoid having to pay if you have enough equity in your home or an investment property to cover the deposit amount.

In terms of your own financial situation, lenders will typically require a Debt To Service Cover Ratio (DSCR) of around 1.5 times.

What if it’s an existing store?

If you’re not buying a brand new store and you’re instead purchasing from an existing franchisee, then the lender will want to see business transaction statements and business tax returns.

Banks see a medium level risk in buying an existing store but the upfront capital costs can be way cheaper. We may still be able to help you qualify!

Although the business is backed by Outback Jack’s, most lenders will want to see at least above 1.5x earnings before interest, tax, depreciation and amortisation (EBITDA).

The lender will also be asking why the owner is selling, taking into account the store location, vacancy rates on tables and how long management and staff have been on board.

Be careful!

When you buy an existing store, you’re not only taking on the bricks and mortar, the staff and stock, you’re also taking on the reputation. Bad reputations can be hard to shake.

Poor customer service all the way to the extremes of regular robberies or food poisoning won’t come out in the business financials!

The current franchisees will be reluctant to tell you this information and Outback Jack’s itself may not be upfront with you either.

Because of this, you may want to enlist the services of a business broker to help you choose a strong-performing Outback Jack’s restaurant when you’re checking out the classifieds.

We’re experts in franchise loans

Not many mortgage brokers understand commercial and business loans let alone the finance to buy a franchise.

Many of our brokers have several years of experience working in the commercial credit departments so they know exactly what a winning application looks like.

On top of that, they have special relationships with the key decision in the business department meaning that they have the negotiation strength to request discounted interest rates, better loan terms and higher LVRs.

Call us on 1300 889 743 or fill in our easy assessment form and you may soon be on your way to owning an Outback Jack’s Bar & Grill.

Can I get any revenue estimates?

Outback Jack’s will generally release this type of info near the end of the application process but prior to signing the franchise agreement.

Bare in mind that these figures will largely be average estimates depending on store size and location so reliance on these figures would be a mistake.

Your best bet is to speak to a business broker that specialises in franchise businesses. They may be able to give you some insight into the franchise model, how past franchisees have performed and common pitfalls.

You can also speak to current franchisees yourself – Outback Jack’s must provide the contact details of current franchisees as per the Australian Competition and Consumer Commission’s (ACCC) ‘Franchising Code of Conduct’.

How do I sign up as a franchisee?

If you’re interested in owning an Outback Jack’s franchise, contact their franchise department and request a Uniform Franchise Offering Circular (UFOC).

This is essentially the franchise kit and it covers such information as:

  • Litigation.
  • Bankruptcy.
  • Initial franchise cost and ongoing fees.
  • Initial investment.
  • Restrictions on what you can sell.
  • Outback Jack’s obligations.
  • Your obligations as a franchisee.

The steps are as follows:

  • Have a read of their franchise information guide and then fill out the franchise application form.
  • Outback Jacks will call you to organise a time to have a meet and greet to determine when you’re the right fit as a franchisee. You also have the opportunity to ask plenty of questions
  • If you decide to proceed, they will then ask you to provide other evidence like your past experience, any hospitality qualifications, references and even your financial records. You should ask for a privacy declaration that stipulates that they will only use your personal financial situation for the purposes of assessing your franchise application.
  • At this stage, it’s important to seek independent legal and financial advice. Outback Jack’s will ask you to pay a deposit. It’s recommended that you speak with your mortgage broker about applying for pre-approval for your franchise loan before you lay down any funds.
  • Following this step, you will receive disclosure documents which will go into more detail about what you can expect from working under Outback Jack’s. The franchise fee is totally refundable until you sign the franchise agreement.
  • Don’t sign the franchise agreement until you’re pre-approved!

What are the franchise fees?

The total costs to purchase the franchise are $450,000, although this varies depending on the restaurant size, location and building condition.

Outback Jack’s have strong negotiating power with landlords so you may be able to get a better price than what they’re quoting in their franchise kit.

The breakdown of other costs include:

  • Converting an existing restaurant: $250,000.
  • Franchise fee: $49,500 (including GST) paid when you sign the franchise agreement.
  • Royalty fee: This is an ongoing cost of 8% of gross monthly revenue.
  • Marketing and advertising commitment: Another ongoing cost of 4% of annual gross turnover.

Who exactly holds the lease?

Similar to other franchise systems, Outback Jack’s is actually the leaseholder even though you’re the business owner.

The leasehold relationship exists between Outback Jack’s as the franchisor and the landlord or lessor.

This arrangement is known as a head lease, where Outback Jack’s effectively subleases the premises to you and you pay rent as if you were running any other type of business.

There are a number of pros and cons of a head lease arrangement but the main benefit is that you can leverage the restaurant’s negotiation power.

They will also handle any disputes or queries you might have with the landlord.

Info on Outback Jack’s

The business was founded by husband and wife team Graeme and Denise Diamond who each has more than 20 years of experience in hospitality.

Back in the 1980s, they owned The Mineral Springs Hotel in Spargo Creek in Victoria and grew the restaurant into one of the most steakhouses in the area.

They opened the first Outback Jack’s in Tamworth in 2005, 3 years after they retired! Around 3 months later, the restaurant was franchised.

In 2010-11, Outback Jacks Bar & Grill purchased all six remaining New South Wales-based Lone Star restaurants and rebranded them once suitable franchisees were found.

To this day, Outback Jack’s is 100% Australian-owned and serves Certified Australian Angus Beef and MSA (Meat Standards Australia) approved produce, which is backed by the Meat and Livestock Association.

As a fully licensed family restaurant, it’s catered to both adults and children, with play areas for the kids and a wide selection of wine and beer for mum and dad.

The family bar and grill is targeted mainly at 18-35-year-olds.

Overview of the chain restaurant industry

Market research company IBISWorld defines Chain restaurants defined as sit-down restaurants that provide table service. This includes licensed restaurants, BYO restaurants and unlicensed restaurants.

Restaurants like Outback Jacks are benefiting from positioning themselves as alternatives to fast-food chains, although its market share still trails behind one of its closest competitors, Hog’s Breath Cafe.

The good news is that signs are pointing to more disposable income among Australians, who are once again open to luxury spending on take-out dining, according to IBISWorld.

Revenue estimates for the five years to 2017 are well over $397 million with projected annual growth of 2.1%.

Do you qualify for franchise finance?

Call 1300 889 743 or complete our free assessment form and discover if you qualify for an Outback Jack’s franchise loan.

  • Zach

    Can we just use one year’s tax return and not two?

  • Hey Zach, although there are a few lenders that can accept one year’s tax return, it’s usually in the case of a home loan. For commercial property or franchise loans, you’re generally required to provide two so it’s unlikely that one will do.