With half of Australian franchisees struggling to get working capital to grow their business, could the key to unlocking flexible finance be sitting in their EFTPOS terminals?

According to the Franchising Australia 2014 survey an estimated 70,000 business across the country are part of a franchise group. When head office-owned stores are included, the number of franchise storefronts rises to 79,000, and in total represents almost four percent of all Australian businesses.

Sales growth across the sector is also growing — up from $62 billion in 2011 to $65 billion in 2014. And as an engine of growth, the sector is formidable for driving employment rates. In 2014 the total number of employees was recorded as 461,000, up from 407,000 people three years earlier.

But continuing this success story requires sustainable sources of funding. The survey noted that 48 percent of franchisors revealed that prospective franchisees experienced difficulty in obtaining finance.

Lack of access to finance holding stores back

For many would-be franchise owners, getting a financial foothold in this growing sector is often just the beginning of what can typically become an ongoing working capital struggle. Those who can’t access funding quickly and easily are often forced to delay shop refurbishments or hold off investing in new point of sale systems until they can secure finance at an affordable rate.

For head office, conscious of maintaining a national brand identity and standardised processes and technology platforms, these financing headaches and delayed investment at a store level can have group wide financial implications, with fewer customers through the door and marketing spend curbed.

And while many franchises attempt to assist store owners by introducing them to alternative finance providers who are more willing to offer unsecured or flexible finance, often complex pricing and hidden fees and charges by lenders can see franchisees sent into financial hardship.

So how could a simple and innovative working capital solution work for the majority of franchises? In this area, growing business banking provider Tyro is leading the way.

Unlocking growth via EFTPOS sales

Armed with its new banking licence, Tyro will begin piloting its first EFTPOS powered growth funding solution in July. Tyro intends on letting business owners unlock the capital stored in their regular and reliable EFTPOS takings, all the while making repayments easy and flexible with seasonal highs and lows.

And rather than go through a lengthy application process with a bank or broker, franchises using Tyro EFTPOS will instead receive a customisable funding offer directly via their mobile, inside the Tyro App. With offers only being extended to pre-approved Tyro merchants, Tyro will take the stress and hassle out of physically applying for finance for franchise owners.

Automatic and flexible repayments

Many owners find traditional loan repayments aren’t flexible when it comes to the seasonal nature of their business. Instead, repayments for Tyro’s Growth Funding product will be made daily with a fixed percentage of everyday EFTPOS sales. So in a slow month, repayments will adjust accordingly, giving store owners a little breathing space when they need it.

Xero + Tyro EFTPOS + POS = the perfect franchise package

The first release of growth funding will be made available to those Tyro EFTPOS customers who have taken up Tyro’s bank account, the Tyro Smart Account. The Smart Account is activated by Xero, and along with the standard features of a business bank account, allows for automatic bill payments.

By taking a technology first approach to cloud banking, soon Tyro will have a highly tailored package for franchise owners that all but makes banking invisible. And our bet is that franchise owners won’t mind that one bit at all.

Tyro has a number of large franchises in its client portfolio including Sumo Salad, Soul Origin, Go Vita, Coco Cubano, Food Co and the Cheesecake Shop.