Buying into a franchise is often seen as a faster, more supported pathway into business ownership.
However, franchising doesn’t remove the realities of running a business. Even with strong systems behind you, success may ultimately come down to understanding what drives profitability and keeping a close eye on how cash moves through the business.
The appeal and reality of franchising
Franchising offers newcomers the benefit of established processes, brand recognition, brand recognition and a proven model. But as Franchise Council of Australia CEO Jay Westbury notes, success still depends on strong business fundamentals.
“Franchising provides a solid foundation but at the end of the day, keeping your franchise up and running means knowing how to run a business. New franchisees can underestimate how quickly costs add up, or assume steady sales automatically translate to financial stability, which isn’t always the case.”
That pressure often comes down to cashflow. According to Ourania Arnaoutis, regional manager of franchise banking at NAB, managing cash in and out of the business is critical to sustaining growth and profitability.
Practical tips for franchisees wanting to master their cashflow
1. Clearly track monthly cash inflow and outflow
“For individuals looking to start out in the world of franchising, tracking monthly cash inflow and outflow can help provide a clear picture of where you might be falling short, or where you may actually have a surplus,” Ourania explains.
“While it sounds simple, maintaining a disciplined view can help you avoid the unforeseen and plan for future growth, because you can see exactly how much cash you’ll have on hand to keep operations running efficiently.”
2. Have a set amount of cash on hand in case of emergencies
According to Ourania, the amount of cash you need on hand depends on your operating needs and the timing of income and expenses.
“One simple, but often overlooked strategy is spreading expenses like rent, wages, and utilities across the month rather than clustering together.”
“We always try to encourage our clients to have at least three months of cash set aside. Just as you would in your personal life, having an emergency fund is equally as important for your business.”
3. Make small adjustments to optimise your cashflow
Once you can see exactly how money is flowing in and out of the business, it becomes clear where the inefficiencies or opportunities may lie.
For many franchisees, small adjustments can have a meaningful impact — improving margins, easing pressure, and creating more flexibility to reinvest in the business.
“Optimising cashflow is a constant process in a franchise. We’re always helping our clients look for new ways to minimise costs and maximise revenue, whether that’s through securing bulk purchasing discounts, or introducing new systems and inventory controls.”
Ourania explains that even well-run franchise businesses can experience cashflow pressure, particularly early on when much of their capital has already been committed to upfront setup costs.
4. Recognise when it’s time to bring in reinforcements
“Sometimes it’s about shortterm support to manage timing gaps, such as an overdraft, and other times it’s about freeing up cash within the business – for example, by financing equipment or using trade finance to bridge the gap between buying and selling stock,” she explains.
“The key is ensuring the financial support aligns with what you’re funding. The structure really matters,” she says, noting that flexibility is critical, particularly as businesses grow.
Essential lessons for franchisees
Franchising can give business owners a valuable head start, but long-term success is ultimately shaped largely by financial discipline. As Jay and Ourania highlight, franchisees who perform well ver time are those who actively manage their cashflow.
That means knowing the fundamentals, planning realistically, and making informed decisions about how money moves through the business, both today and over the long term.