Twelve Questions to Ask Before You Buy a Franchise

Most people who regret buying a franchise do not regret the brand. They regret the questions they did not ask.

It usually happens the same way. You attend a discovery day. Everyone is warm, the presentation is polished, the numbers on the screen look achievable, and you leave with a folder and a good feeling. Three weeks later you are sitting at the kitchen table with the agreement open, and you realise you cannot actually explain to your partner how the renewal works, what happens if you want to sell in five years, or why the marketing levy is charged the way it is. You do not want to go back and ask, because asking now feels like admitting you were not paying attention the first time.

That feeling has a name, and it is embarrassment. It is the single most expensive emotion in franchising, because it stops good, capable buyers from asking basic questions at exactly the moment those questions are cheapest to ask.

So here is the list. Twelve questions, in the order they are worth asking, with a note on what a good answer actually sounds like.

Before you look at the numbers

1. How many franchisees have left the network, and why?

Every network loses people. That is normal and it is not a warning sign on its own. What matters is whether the franchisor can tell you, without hesitation, how many have left, over what period, and what happened to their territories. A franchisor who has thought seriously about their own network will give you a straight answer and will often volunteer the awkward parts. Vagueness here is the strongest single signal you will get all process.

2. Can I speak to a franchisee who is struggling, not just your best performer?

You will always be offered the star. Ask for someone in their first year, someone in a territory similar to yours, and ideally someone who is finding it harder than they expected. A confident franchisor will make that introduction. If the answer is that nobody is struggling, that is not reassurance, it is an incomplete picture.

3. What does a genuinely average franchisee earn, and how long did it take them to get there?

Not the top performer, not the projection, the middle of the network. Ask how many franchisees are above and below that figure. Ask when it was measured. Then ask the follow up that most buyers skip: what were the earnings in months one to twelve, before the business matured.

4. What is the full cost of getting to opening, including everything the franchise fee does not cover?

The franchise fee is the number everyone discusses. The one that catches people out is the gap between the fee and the day the business actually starts trading. Vehicle, equipment, insurance, legal fees, stock, premises deposits and your own living costs while revenue builds. Ask the franchisor to walk you through it line by line, then ask a current franchisee whether their real figure matched.

When you are looking at the model

5. What exactly am I paying the management fee for?

You will pay a fee on revenue for the life of the agreement, so it is fair to ask precisely what arrives in return. Training, systems, national marketing, lead generation, technology, support visits. Ask what the support looked like in month two and what it looks like in year four, because those are usually very different.

6. How is the marketing levy spent, and who decides?

Ask whether the levy is held separately, what it was spent on last year, and whether franchisees see a breakdown. Ask whether it generates leads for your territory or builds brand awareness nationally, because those are not the same thing and buyers frequently assume the first when the franchisor means the second.

7. What are the boundaries of my territory, and what stops it shrinking?

Get the territory defined on a map, in writing, with the population and business count that sits inside it. Then ask the harder version. Can the franchisor open a corporate site inside your area. Can they sell online into it. Can they place a new franchisee next door if your performance dips. If a territory is exclusive, the agreement should say so plainly.

8. Who owns the customers?

In most franchise agreements the answer is the franchisor, and that is not unreasonable. What you need to understand is what it means in practice when you come to sell. Ask whether your customer data, contracts and recurring revenue transfer with the business, and under what conditions.

Before you sign anything

9. What happens at the end of the term?

Ask about the length of the initial term, whether renewal is automatic or at the franchisor’s discretion, whether a renewal fee applies, and whether you would be asked to sign whatever the current version of the agreement says at that point rather than the one you signed originally. This one surprises people years later, which is precisely why it is worth ten minutes now.

10. If I want to sell, what do I need your permission for?

Almost every agreement requires franchisor approval of a buyer. Ask what the approval criteria are, whether there is a transfer fee, whether the franchisor has first refusal, and how many franchisees have sold successfully in the past few years. A network where people have exited well is a network that has proved the asset is real.

11. What can you terminate me for, and how much notice do I get?

Read the termination clauses before you read anything else in the agreement. Ask the franchisor to talk you through the grounds in plain English, and ask what happens to your equipment, stock, customers and territory afterwards. This is not a hostile question and a good franchisor will not treat it as one.

12. What do you expect from me that is not written down?

The most useful question in the list, and the one almost nobody asks. Attendance at conferences, minimum activity levels, response times, working in the business rather than on it, participation in national campaigns. Every network has cultural expectations that sit alongside the contract. You want to hear them before you commit, not after.

What to do with the answers

Write them down. Not a summary afterwards, the actual answers, in the meeting, with dates and names attached. Then compare what you were told against what the franchise agreement says, clause by clause. Where the two do not match, the agreement wins, every time, regardless of how the conversation felt.

If the answers to these twelve come back clear, specific and consistent across the franchisor and the franchisees you speak to, you are looking at a network that has done the work. That is a good place to be.

The next stage is validation, where you take a narrower and more pointed set of questions directly to existing franchisees rather than to the franchisor. We cover those separately, because the questions that work in a validation call are different from the ones on this list.

Even if every answer here satisfies you, do not treat that as a substitute for reading the contract properly. The whole point of asking is to know what should be in the document. Checking that it is there is a separate job.

Have the agreement reviewed before you sign it

The franchise agreement is the only version of the relationship that is enforceable. If any of these twelve questions produced an answer you liked, it needs to appear in the contract, and if any produced an answer you did not fully understand, the contract is where you find out what it actually means.

Our team reviews franchise agreements for prospective franchisees and explains, in plain English, what you are committing to on term, territory, fees, termination and resale.

Request a franchise agreement review.