Looking for a loan to buy a business in Canada? You’re not alone. Financing is among the most common hurdles for aspiring entrepreneurs, especially first-time business owners. While MTY Franchising does not offer loans directly, we work closely with major Canadian banks and financing partners to help you find the right solution to fund your restaurant franchise investment.

In this guide, we break down everything you need to know to secure financing for a franchise in Canada, explain how franchise lending works, and show how MTY equips you with the guidance to manage this process with clarity and confidence.

How to Finance Buying a Franchise in Canada

Step 1 – Understand Your Financing Options

Canada offers several options for individuals looking to finance a business purchase, including:

• Government-backed Canada Small Business Financing Program (CSBFP): The preferred small business loans by most national banks because the government guarantees a large part of the loan to the lender. While the approval process can be lengthy and requires good credit and detailed paperwork, the benefits are lower interest rates, longer repayment terms, and easier qualification for startups. 
• Line of Credit: Often used to supplement CSBFP loans when extra funds are needed for larger projects. Although line of credit interest rates are typically variable and higher than CSBFP rates, they provide flexible access to funds that you can draw from as needed, paying interest only on the amount used.
• Equipment Financing: Loans or leases provided by some lenders specifically for purchasing business equipment, where the equipment itself often serves as collateral.
• Commercial loans: For larger financing needs over $1 million, such as multi-unit expansions or real estate. Require strong credit, collateral, and financials. Offered by major banks like RBC, BMO, and Scotiabank, these loans have varied terms and interest rates, providing large capital with tailored repayment options but involve a longer, more complex approval process.
• Other Financing Programs: Offered by community lenders, nonprofit organizations, government agencies, and specialty lenders. These provide faster approval and flexible criteria for startups or smaller loans but may have higher rates and shorter terms than traditional loans.
  

Did you know? Lenders frequently favour restaurant franchise investments over independent ventures due to their established models and proven operational support. A multi-location organization’s proven work framework and resources can significantly strengthen your loan application.

Step 2 – Work With Franchise-Friendly Lenders

This is where MTY steps in to help. While we don’t provide loans ourselves, we’ve built strong relationships with major Canadian banks over our 40+ years in the restaurant franchising business. These partnerships allow us to connect franchisees with lenders who are familiar with the value of investing in MTY food brands.

Our team helps by:

• Assisting you with the mapping of what will be the required documentation
  
• Guiding you through the expectations of potential lenders
  
• Recommending financing programs that align with your profile and business goals, helping you navigate the funding options.

Step 3 – Prepare a Strong Business Plan 

After approaching a potential lender, the first thing you’ll need is a robust business plan. This is your chance to show that you’ve done your homework and are ready for the challenge. Your plan should cover:

• Your franchise brand and market potential: Why this brand, and why now?
  
• Startup costs and working capital: How much do you need to get started, and how will you manage day-to-day expenses?
  
• Revenue projections and break-even analysis: What do you expect to earn, and when will you start turning a profit?
  
• Operational structure and goals: How will you run the business, and what are your growth targets?
  

A solid plan shows banks that you’re serious, prepared, and low-risk, especially when combined with projected financial data from a well-established restaurant franchise from MTY’s portfolio.

Why Lenders Prefer Franchise Businesses

Restaurant Franchises Have Strong Appeal

Understanding the factors behind this inclination can provide valuable insights while conducting your research and business plan. Here are some key reasons to consider:

• Established business models: A proven framework that reduces risk.
  
• Training and operational support: Provided by franchisors like MTY, ensuring you’re never left to figure it all out on your own.
  
• Brand recognition: Helps attract customers faster and reduce marketing risks.
  
• Benchmark data: Lenders love the predictable performance of franchise businesses, especially those with a solid history.
  

Restaurant franchises benefit from greater predictability, making it easier to secure financing through comparable data insights regarding sales and consumption in various cities, regions, and countries where they operate.

Hear from a multi-franchisor who has successfully made a presence across all the concourses at Calgary’s airport with popular brand Jugo Juice.

MTY’s Portfolio Strengthens Your Case

MTY’s portfolio offers franchises across various restaurant categories—from quick-service restaurants (QSR) to casual dining—and includes some of the most well-known brands in the industry. This broad range increases the likelihood of finding a franchise that suits your financial goals and lender expectations.

What You’ll Need to Apply for a Franchise Loan

Here’s what you’ll need to provide when applying for financing:

• The detailed business plan we discussed
  
• Personal credit history and net worth: Shows your financial reliability and stability.
  
• Franchise Disclosure Document (FDD): This is the legal document the franchisor must provide. It details the franchise’s costs, fees, and obligations.
  
• Investment breakdown: A breakdown of how much you need and where it’s going, showing the lender you’ve planned for all start-up costs including franchise fee, working capital, and equipment.
  

Many young entrepreneurs (yes, even those in their early 30s to mid-30s) might be surprised to learn that while a perfect credit score is an important factor, it isn’t necessarily the only one. Lenders often value a strong business plan, clear commitment, and a well-regarded restaurant franchise brand.

Key Considerations for Financial Preparedness & Due Diligence

While applying for a loan is important, financial preparedness is key for long-term success:

• Working Capital: Many new businesses fail due to insufficient funds during the early months. Having enough working capital to cover unexpected expenses and bridge revenue gaps is crucial.
  
• Understanding the Franchise Agreement: Always review your franchise agreement thoroughly. Know who owns the lease, the royalty structures, and performance benchmarks. A clear understanding now can prevent future surprises.
  
• Contingency Planning: Sometimes, initial sales fall short of projections. Access to personal equity or pre-approved lines of credit can provide a vital safety net.

Moving Forward with Confidence

Leaping into franchise ownership is a big step, but it doesn’t have to be daunting. With the right resources and guidance, you can confidently move forward. Across MTY’s portfolio, franchisees describe how guidance in areas like financing, training, and operations helped them navigate the early stages and build momentum for their businesses.

Zafarullah Rashid, a multi-unit franchisee of La Diperie in Ontario, shares: “Partnering with this brand has been one of the most rewarding business decisions I’ve ever made. From day one, the corporate team has provided exceptional support, whether it’s in training, marketing, or operational guidance. The systems in place are incredibly streamlined, and the commitment to quality and customer satisfaction is evident in everything we do.”

Marie-Josée Leblanc, a Café Dépôt franchisee in Quebec, says: “Purchasing a Café Dépôt franchise was a seamless experience thanks to their supportive team. They guided us through financing, supplier accounts, and setup, significantly easing our workload. The ongoing assistance and regular evaluations keep us striving for excellence. We are now proud to help train new franchisees, thanks to the strong foundation they provided us.”

These stories reflect how MTY’s proven frameworks and dedicated support can help new owners step into their roles with clarity, resources, and confidence.

Take the First Step Toward Franchise Ownership

If you’re ready to explore restaurant franchise opportunities in Canada, now is the time to take action. Here’s what to do next:

• Visit mtyfranchising.com to explore our brands.
  
• Read our Franchise Opportunities Canada Financing Guide.
  
• Reach out via our contact form and start your journey.

FAQs

Q: Does MTY offer loans directly?
A: No. MTY doesn’t provide direct financing, but we help franchisees connect with banks that do.

Q: Which banks does MTY work with?
A: MTY partners with most major Canadian banks, including Scotiabank, RBC, BMO, TD and more.

Q: Does MTY have regional managers who help with financing in different areas of Canada?
A: Yes, MTY has regional managers who are experts in the local market. They understand that different provinces and cities may have unique financial landscapes, taxes, and regulations. These managers ensure that you receive tailored support and guidance specific to your region or district to help smooth your restaurant franchise financing process. Contact us to get assistance.

Q: Where can I find more detailed financial information on investing in a franchise?

A: You can explore detailed investment information, including franchise fees, financing options, and expected returns, in our Franchise Investment Brochures.