Starting a franchise in Belgium: make your business model ready for financing

A successful existing business is not automatically a franchise model that a bank can readily assess. If you are building a franchise network in Belgium, you need to help prospective franchisees explain what they are financing, which terms apply and who bears which costs. This calls for a reusable financing pack: not a sales brochure or a promise of credit, but a verifiable foundation that each candidate develops with their own accountant and bank.

1. Set out what the candidate needs to finance

Start with the whole project, not the potential loan. Gather the costs involved in setting up a new outlet using your franchise model. Distinguish between capital investment, one-off start-up costs and the working capital needed to cover day-to-day operations.

A useful breakdown is:

• Fit-out and equipment: building work, furniture, machinery, till system and installation.
• Access to the franchise: initial franchise fee and any training or support charged separately.
• Pre-opening preparations: professional advice, insurance, initial stock and local launch marketing.
• Working capital: rent, wages, supplies and other payments before income covers them in full.

For each item, record the supplier, who pays, when payment is expected and the basis of the estimate. Make clear whether amounts include or exclude VAT. Ask the accountant to assess how VAT and payment terms affect cash flow planning.

Use your own business as a starting point, not as a universal price list. A candidate may, for example, need to fit out an empty shell, whereas you took over fully equipped premises. Highlight such differences explicitly. Otherwise, starting the franchise may appear cheaper than it actually is for that candidate.

2. Build a pack that a bank can verify

The financing pack should show how the franchise model, investment and business operations fit together. Briefly describe how the outlet generates revenue, which activities are essential and what support you provide. Then add supporting documents for the candidate to discuss with their advisers.

These might include quotations, an investment schedule, a breakdown of franchise fees and a summary of relevant contractual terms. Always state the date and validity period of quotations. Separate confirmed amounts from provisional assumptions.

Historical figures from your own outlet can help, provided it is clear what they represent. For example, state whether premises costs reflect market rates and whether the founder's work is fully accounted for in the costs. Do not suggest that the results of one existing business will automatically carry over to another.

Also set out the rights to use equipment and systems: which equipment will the candidate buy, what will be leased, and which systems will remain yours or a supplier's? This helps address questions about ownership, security for lending and dependencies.

Standardise the structure, not the outcome. The candidate remains responsible for their own finance application and business plan. Ask them to substantiate local quotations, their own funds and personal financial commitments. Do not present your pack as a bank-approved template.

3. Align financing with Belgian disclosure requirements

A bank meeting does not replace statutory pre-contractual disclosure. In Belgium, franchise agreements that meet the statutory definition fall under the rules on commercial cooperation agreements in Book X of the Code of Economic Law, particularly Articles X.26 to X.33.

The candidate must receive the draft agreement and the pre-contractual disclosure document, commonly known as the PID, at least one month before entering into the agreement. The PID contains important contractual provisions and socio-economic information. A financing pack is a supplementary tool, not a substitute.

Check that the amounts and obligations in the bank pack match the draft contract and the PID. The bank should not base its assessment on a lower initial franchise fee or fewer mandatory investments than you will ultimately require.

Also seek legal advice on the sequence of the credit application, lease arrangements and signing of the franchise agreement. Avoid encouraging the candidate to make an early reservation payment or enter into a commitment to you to speed up their finance application. Any financing condition in the agreement needs to be tailored: specify clearly what financing must be secured, by when, and what happens if it is refused.

4. Allocate responsibilities before the first bank meeting

Appoint one contact within your business to handle factual questions about the franchise model. They can explain cost items and supply documents, but must not speak on behalf of the lender or promise approval.

Ask the candidate to involve their accountant in assessing funding requirements and repayment capacity. The bank will then assess the credit application against its own criteria. An introduction to a bank can be useful, but it is no guarantee of approval and must not obscure the candidate's freedom to choose their lender.

Keep a record of questions after each meeting. Is information about leased equipment or payment terms repeatedly missing? Improve the standard pack for future candidates, without sharing personal financial information within the franchise network.

Practical step: put together a single pack containing a cost breakdown, supporting documents, contractual obligations and a clear allocation of responsibilities. Have an accountant and a legal adviser review it before giving it to your first candidate.