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Telstra is arguably the most recognisable mobile and telecommunications brand in Australia and it can be a great way to get started in small business.
If you have a retail background and a passion for customer service, a Telstra shop franchise loan can help you finance your dream.
How much can I borrow?
If you have the retail experience and business acumen to run a successful, we can help you to build a strong franchise loan application.
By choosing the right lender, you may qualify for the following:
- New or existing Telstra licensed store: Borrow between 50-70% of the total costs to buy the business.
- Loan term: 5 years (as per the franchise agreement).
- Loan term using property as security: 25 to 30 years.
- Interest only: Typically 2 years.
- A business plan is required: This includes a local market analysis and cash flow forecasting.
- No doc loans: Not available.
- Reduced interest rates: Discounted rates below “set” business loan interest rates on offer subject to your deposit size and application strength.
Use your residential property to borrow up to 100% of the franchise costs!
If you don’t have a deposit or would like to have some extra cash flow in the first crucial months of operations, this can be a great option.
You need the equity though so rather than going to a bank directly and possibly get declined, speak to a specialist mortgage broker first.
Please call us on 1300 889 743 or complete our free assessment form to find out if you’re eligible for a Telstra shop franchise loan.
Lending criteria
How do you qualify for a Telstra shop franchise loan?
Like any other type of business or commercial loan, approval comes down to how your experience and business acumen.
It’s crucial that this is reflected in your franchise loan application, which is where a specialist mortgage broker can mean all the difference.
The bank will generally require:
- Your last 2-3 years personal tax returns and/or business financials if you’re currently self employed.
- You’ll need a clear credit history.
- Evidence of your deposit although it doesn’t have to be genuine savings.
- Evidence of around 3-5 years in a managerial role in retail or a telecommunications store.
- A business plan that you’ve discussed with your accountant showing how you plan to stay profitable and weather tough business periods.
The more information that you can provide to support your business acumen, the better.
Do you plan to buy an existing store?
Some lenders will want to know why the current franchise licensees (vendors) are selling.
At least one of our major banks requires the existing business to be generating 2.00x earnings before interest, tax, depreciation and amortisation (EBITDA).
However, this isn’t a requirement with other lenders.
What should be in my 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.
A business plan 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.
Speak to a franchise loan expert
Speak with a mortgage broker that specialises in franchise loans.
They can help you qualify for negotiated interest rates based on the strength of your application.
With nearly 40 lenders to choose from, we have strong relationships with the key decision-makers in business banking so you can borrow up to the maximum loan amount.
Call us on 1300 889 743 and talk to us about a Telstra shop franchise loan.
Can I hire a manager?
Owning a franchise isn’t a passive investment.
As per Telstra’s dealership agreement, licensees are required to be the owner-operator and work full-time in the business.
What are the costs?
Telstra’s licensee model is a little different to other types of franchise offerings.
You’re essentially buying into the Telstra business and, in turn, receiving a licence to use the Telstra Licensed Store brand.
The benefit is that there are:
- No upfront or ongoing license of royalty fees.
- No training fees.
That’s almost unheard of when it comes to buying a franchise!
Where most of the costs lie is in the store fit-out.
A full breakdown of the costs will be provided along with a uniform franchise offering circular (UFOC), or franchise kit, once you complete an express of interest on the Telstra website.
What's the franchise application process?
Telstra requires that the applications incorporate a new company to be the ‘contracting’ licensee.
The applicants must then have a required share and/or management interest in the company and majority shareholding.
- Request a franchise kit by completing your details on the Telstra website.
- Fill out their application form.
- The application will be reviewed and you’ll conduct a phone interview with one of their business development managers.
- If you’re successful, you will then be given a confidentiality agreement to sign and a Deed of Undertaking and Acknowledgement.
- At this point, you’ll be provided with sales figures along with a financial planning guide and an operational questionnaire.
- This is followed by a face-to-face interview with one of their licensee development managers.
- After review, you’ll either be accepted or rejected as a franchisee.
- You’ll then be given a franchise kit which contains an example of the disclosure document and franchise agreement. Ask if you can see this upfront before providing your deposit or undertaking training!
- Store fit-out with start while you undertake full-time and in-store training.
Can I buy multiple sites?
Typically, you need to have been running a successful store for at least 12 months before you can be considered for a second one.
You also have to submit a separate franchise application each time you want to open another store.
How long is the franchise agreement for?
Once you’re approved to as a franchisee, you’ll be granted a five-year licence with a 5-year option to renew.
If you decide to sell your store, Telstra doesn’t simply permit the transfer of a licence or Telstra Dealership Agreement.
In such an event, the new owner has to submit a new application which will be review by Telstra management.
Have you done your due diligence?
Just because you’re buying a franchise through a major company doesn’t mean you shouldn’t undertake due diligence.
Consider the store location and discuss with a business accountant.
Does the store have good visibility and foot traffic numbers? Does the local economy and demographics support your business?
Another essential tip is to read the UFOC carefully before signing the franchise agreement.
Have you gotten legal and financial advice?
Before signing the franchise or licensee agreement with Telstra, it’s essential that you get both independent legal and financial advice.
You’re signing up for a minimum of 5 years so it’s important that you understand your rights and responsibilities as a licensee.
It’s also important to consider your own financial situation including having sufficient working capital to continue running profitably.
Ask us about a Telstra shop franchise loan
Call 1300 889 743 or fill in our free assessment form today.