You have done your due diligence and now want more detail about the franchises you are interested in. This means taking the next step and speaking to someone to talk through your aspirations and the finer details of the franchise opportunity.
But what to ask? Here are ten areas to help you prepare for the conversation:
1. Franchise longevity & network performance
Discover the longevity of the network to gauge any sector or business issues they have overcome. Ask how many franchisees are in the network, what year‑on‑year growth looks like, and request to speak directly to franchisees at different stages to understand day‑to‑day realities, training usefulness and challenges.
2. Franchisees failures over the last twelve months
Franchisors expect this question because business failures happen. Assess how open and honest they are. Failures may be due to poor financing or misrepresentation rather than the model itself. Honesty on both sides is vital.
3. The level of support
You will have read marketing material; use the conversation to verify its accuracy. Ask for details of support at each stage, start‑up, growth and ongoing training, and what commitment is expected from you.
4. The numbers & expected return on your investment
Know the franchise fee and request a breakdown of what is included. Inquire about additional costs such as marketing fees, ongoing licencing, supplier fees or conference costs. Ask how soon a return can be expected, what the five‑year and ten‑year projections are, whether they are averages, and what high‑performing franchisees are doing differently.
5. Expected outlay
Find out when you may need to recruit staff and whether you will need a workspace, fixtures, stock or supplies. Clarify which costs are required from day one and which can be deferred. If you plan to operate from home, ask how that affects the outlay.
6. Growth limitations
Understand any restrictions on the size of your business. For a sales‑based operation the limit may be the number of salespeople; for a van‑based operation it may be the number of vehicles you can manage.
7. Territory rights and exclusivity
Ask whether you will have an exclusive territory, how it is defined and whether it can be expanded. Clarify any restrictions on operating within a certain radius of other franchisees.
8. Exit strategy and resale options
Discuss the process for selling the franchise, any fees involved and the franchisor’s right of first refusal. Understand the conditions that could affect your ability to exit.
9. Ongoing fees and royalty structures
Request a clear explanation of royalty calculations, marketing contributions and any other recurring fees. Determine whether they are based on turnover, profit or a fixed amount.
10. Legal obligations and dispute resolution
Ask for a summary of the key legal obligations in the franchise agreement and how disputes are normally resolved. Knowing whether mediation, arbitration or court action is preferred will help you assess risk.
By addressing these ten areas you will gain a comprehensive picture of the franchise’s suitability and be better equipped to make an informed decision.
