Last Updated: 31st May, 2021

When you think of takeaway chicken, one of the first companies you think of is Red Rooster, an Australian-owned quick service restaurant (QSR) whose franchise model has been running for almost 40 years.

If you’re thinking about getting into the fast food industry, a Red Rooster franchise loan can help make your business dreams a reality.

How much can I borrow?

  • New or existing store: Borrow up to 60-70% of the total business costs or 100% with an existing residential property as security.
  • Loan term: 10 years or up to 30 years with a property as security.
  • Low doc options not available.
  • The bank will require a business plan with cash flow forecasting.
  • You’ll need to have at least 3 years experience in a similar industry.
  • Reduced commercial interest rates available for strong cases.

Which lender will approve my application?

Not all lenders are hungry for a fast-food franchise and each of them have their own borrowing limits for a Red Rooster franchise loan.

By highlighting your strengths as a borrower and business owner, we can help you borrow the amount you need with a competitively priced commercial loan.

Choosing the right lender is key.

Call us on 1300 889 743 or complete our free assessment form to speak with a franchise specialist today.

How do I get approved?

The bank will also want to see that you have some savings or equity in an existing residential property to use as security to cover the remainder of the purchase costs.

They simply won’t lend against the full value of the business without additional security, no matter whether it’s a new store or an existing shop.

Even if you haven’t previously run a business as an owner operator, showing a work history (along with references) that you’ve managed a business or department in a similar industry is acceptable with most lenders.

What if I was running my own business?

If you were running a similar-sized business previously, such as a takeaway or chicken shop, that’s great for your Red Rooster franchise loan application.

It shows that you have a track record with a similar-sized business.

The trick then is to show the banks with your last 2-3 years business activity statements (BAS) and profit and loss statements that you were able to run it successfully.

That means evidence showing that revenue was incrementally increasing year on year or at least remained steady.

The best way to think of a Red Roost franchise loan application is like building a resume of yourself as a business owner.

What should be in the business plan?

Even though you’re buying into a large national brand with a network of support, the bank will still want to see that you’ve done your diligence.

With the help of afinancial professional, it shows that you’ve thought about your venture and, from a business perspective, it will give you a lot of direction and some benchmarks to reach.

A business plan usually includes:

  • A market analysis for the location you’re looking to open or run the Red Rooster store including your target customer base and competition.
  • Sales forecasts and cost of sales.
  • Marketing strategies.
  • Cash flow.
  • Revenue forecasts.
  • Start-up costs.
  • Capital investment requirements.

How can we help?

Other mortgage brokers are afraid to touch franchise business loans because they see it as too much work or they lack the credit knowledge to get the deal approved.

Our brokers on the other hand know exactly which lenders have Red Rooster as an approved franchise.

On top of that, we can find out what their “exposure” limits or appetite is for Red Rooster franchises to avoid the possibility of getting declined.

In some cases, a bank may either limit the amount you can borrow or decline your Red Rooster franchise loan application simply because they have no more funds to allocate.

We can go with the right lender and help you build an application that ticks all of their boxes.

It’s about presenting a strong proposition: the stronger the deal, the better the interest rate we can get you.

Call us on 1300 889 743 or complete our free assessment form and discover how you can use your existing residential property to borrow up to 100% of the business value.

Why buy a Red Rooster franchise?

Red Rooster is one of the most popular and most visited fast-food chains in Australia.

It boasts a support network of business development managers, a comprehensive operations manual and service standards as well as a national marketing muscle.

It’s something the Quick Service Restaurant (QSR) has fine-tuned since first rolling out its franchise model back in 1979.

How much revenue can I expect to generate?

Providing a dollar figure is difficult and misleading because it depends on a number of factors including the location of the store, the staff you have on board and your overall business and management skills.

Your skills in budgeting, cutting costs, and stock and cash flow management are key to generating strong revenue, particularly in the QSR space.

How much will I need to get started?

Costs and fees can vary depending on location and they can change on a regular basis.

As a general rule though:

  • Start-up capital: $500-$600,000 (this is typically what the bank will cover with the Red Roost franchise loan).
  • Franchise fee: $50,000 (excluding GST).
  • Royalty fee: 5% of gross weekly sales.
  • Marketing and advertising fund: 6% gross weekly sales.
  • Working capital: $30,000 as a minimum (the bank won’t cover these funds so you’ll need around this amount in either savings or accessible equity).

What are threats to a Red Rooster franchise?

Although Red Rooster has transformed a lot of over time, the fast food industry overall has had to contend with increased consumer awareness and education around choosing healthier food options.

This change of taste has led to a raft of new “healthier choice” operators in the QSR sector that new franchisees need to be aware of and adapt to.

How will Red Rooster get me started?

  • Red Rooster offers up to 12 weeks initial and ongoing training from everything from cooking procedures and food safety to staff and financial management of the business.
  • You’ll access to their vast marketing and advertising network.
  • Site selection, store construction and fit-out and assistance with lease negotiations.
  • A support network including development managers and store operations managers.
  • Red Rooster has relationships with large entertainment brands and production companies like Dreamworks and Warner Brothers meaning in-store promotions will leverage the brand power of multinational companies rather than small to medium-sized local businesses.

How does the lease arrangement work?

As per the franchise agreement, Red Rooster will sign you up for an initial 10 years with an option for a further 10 years for freestanding stores.

Red Rooster will negotiate the terms of the lease with landlord on your behalf but will usually take on the head lease.

What this means is that you don’t own the lease in the same way that you own the lease with office space for instance.

Essentially, Red Rooster leases the premises from the landlord and then sub-leases the premises to you as the franchisee.

Banks like them because in the event that you default on the Red Rooster franchise loan, you’re not primarily liable for the rent and outgoings of the leasehold.

This means you and the lender are taking much less risk and that’s why one of our lenders is willing to offer up to 70% of the business value.

For stores located in food courts or shopping centres, lease terms are typically for less than 10 years so be careful.

Do your proper due diligence on your finances because it means that your Red Rooster franchise loan term will also be reduced.

Do your due diligence

Apart from your financial situation, you should still undertake your own due diligence of the existing store you’re looking to purchase.

Find out how long the current owners have been operating and why they’re selling.

Ask for their last three business banking and profit and loss statements (P&Ls) and analyse them with the help of your financial adviser.

Just because Red Rooster is a large company, it doesn’t mean your business will automatically be successful.

If it’s a new store, challenge the location that Red Rooster have chosen if you feel the need to.

Does the location have the population growth potential and minimal competition to support your franchise well into the future?

Also, if it’s a relatively new location, check with the local council about any development plans for trade centres and shopping centres.

Stores in close proximity to these locations will help to bring customers to your store, increase your revenue, and ultimately your overall return on investment (ROI) if and when you decide to sell the business.

Speak with a mortgage broker

We’re Red Rooster franchise loan specialists who can help you put together a strong application with a lender that will look favourably at your financial situation and business plans.

Call us today on 1300 889 743 or fill in our free assessment form to discover whether you qualify for a Red Rooster franchise loan!