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
