3.  Franchise Finance
The Franchise Finance product is aimed at assisting black entrepreneurs who wish to acquire a franchise license. The product is aimed at entrepreneurs who wish to start their own businesses by buying a franchise linked to a particular brand to reduce risks associated with start-up businesses lacking a track record.

The key criteria of this product are:

  • The NEF prefers to fund well established franchise concepts

  • Active management involvement by BEE parties is required

  • Minimum BEE shareholding of 50.1% is a requirement
  • NEF funding of franchises is through a loan instrument with the term matching the duration of the franchise license, however, up to a maximum term of 7 years

  • BEE party must have been pre-approved by the franchisor before approaching NEF

  • NEF funding generally limited to R10 million

  • NEF will fund SME; using mainly debt

  • NEF funding is charged at prime linked interest rates

  • The NEF will exit from the investment in 5 to 7 years


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