What percentage of the total franchise investment must a franchisee have in available funds?

There is no fixed percentage.  First a franchisee has to establish with help from the franchisor precisely what total investment is required.  That will not be limited to the amount of the initial fee.  A franchisee will need to look at that initial fee to establish precisely what it is receiving as part of the initial fee and the franchisee should also ask the franchisor for details of what items the franchisee will have to purchase which are not covered by the initial fee.  Those items could include a vehicle and vehicle livery or fitting out shop premises.  Then the franchisee needs to establish, again with help from the franchisor, what its working capital requirements will be. Franchise businesses, like any other business, will not be profitable immediately because there will be a period of time when a franchise business builds up its turnover and increases its customer base.  That period of time has to be funded from the franchisee’s own resources.

Generally the banks are supportive of franchising.  The willingness of a bank to lend will, however, depend on the bank’s view about the franchisor and if the franchisor has had a significant number of franchisee failures it may not be prepared to lend at all.  Clearly banks are much more willing to lend to prospective franchisees of established franchisors with a significant number of franchisees who are operating successfully. The banks will also look for security – usually on the equity in a franchisee’s home.  If there are issues concerning security it may be possible to make use of a government scheme to assist financing of small businesses.  Generally the banks will be able to advise you on that.

In “normal” scenarios the bank will match the investment that a franchisee makes on a pound for pound basis.