Buying a franchise can be an exciting pathway to business ownership—but it’s not a decision to take lightly. From understanding the brand’s support system to digging into the fine print of the Franchise Disclosure Document (FDD), asking the right questions upfront can save you time, money, and major headaches down the line.
At Franocity, we work with future franchisees every day and know exactly what questions you should be asking before signing on the dotted line. If you’re exploring franchise ownership, here are the top questions to ask before buying a franchise:
1. What Is the Total Investment Required?
It’s essential to go beyond the initial franchise fee and understand the total investment needed to get your business off the ground. This includes equipment, build-out costs, inventory, marketing, insurance, and working capital.
Ask:
- What’s the average startup cost for new franchisees?
- Is there a detailed breakdown in the FDD (Item 7)?
- Are there financing options available?
2. What Ongoing Fees Will I Be Responsible For?
Franchises often charge royalties and other recurring fees, which can significantly impact your profit margins.
Ask:
- What percentage is the royalty fee?
- Are there additional marketing, technology, or training fees?
- How often are these fees paid, and do they increase over time?
3. What Kind of Training and Support Do You Offer?
One of the main advantages of joining a franchise is access to a proven system. But not all support programs are created equal.
Ask:
- What’s included in the initial training?
- Do you offer ongoing education or business coaching?
- Is there local or field support after launch?
4. How Do Existing Franchisees Feel About the Business?
No one offers a clearer picture of the day-to-day experience than current franchisees. Their insights can reveal red flags—or confirm you’re making the right move.
Ask:
- Can I speak with current or former franchisees?
- What are their biggest challenges?
- Are they happy with the level of support from corporate?
(Hint: Item 20 of the FDD contains contact info for current franchisees.)
5. What Does Financial Performance Look Like?
While franchisors aren’t required to provide earnings data, many include performance representations in Item 19 of the FDD.
Ask:
- Is there a financial performance representation available?
- What are the average and median earnings of franchise units?
- What factors influence profitability?
6. What Are the Terms of the Franchise Agreement?
The franchise agreement is a legally binding document. Understanding its terms is crucial before you commit.
Ask:
- What’s the length of the franchise term?
- Can it be renewed? Under what conditions?
- What happens if I want to exit or sell the business?
Make an Informed Decision with Franocity
The right questions lead to the right decision. At Franocity, we guide aspiring franchisees through every step of the discovery process—from narrowing down the best brands to evaluating the FDD with expert eyes. Our mission is to help you find the right franchise, not just any franchise.
Ready to explore your options? Let’s talk! Contact Franocity to schedule your free consultation today.