Questions to Ask About a Franchise Before Signing

Published on
January 24, 2023

When deciding on a franchise to acquire, it is vital to consider the criteria below. These are areas essential to ask about a franchise before signing.

  1. Personal values and interests: Consider whether the franchise aligns with your values, work style, lifestyle desires, skills, financial goals, areas of passionate interests, and any financial constraints.   Can you see yourself with one of these franchises?
  2. Financial stability and profitability of the franchise: Research the franchise's financial performance and success rate. Review the franchise's most recent financial disclosure document (FDD), especially the company's audited performance. All franchises are required by law to have one updated each year.
  3. Business model and industry trends: Understand the franchise's business model and how it aligns with current industry trends. Is it in a growing or declining market? Does the business model create high-value, recurring revenues?
  4. Training and support from the franchisor: Evaluate the franchisor's level of support, including training programs and ongoing assistance.
  5. Reputation and brand recognition: Research the franchise's reputation and brand recognition in the market. What do other franchise owners think? What type of reviews do you see on yelp for this franchise? What comes up when doing a Google search for the most important keyword to discover this franchise?
  6. Location and market conditions: Consider the location and market conditions of the franchise and how they will impact the business. Who are their competitors, and will their presence cause a problem for me?
  7. Legal and regulatory requirements: Understand the legal and regulatory requirements of owning a franchise. In addition, have an attorney review the FDD and Franchise Agreement to understand all the fine print you are committing to before signing.
  8. Investment and ongoing costs: Carefully review the investment and ongoing costs associated with the franchise, as well as the potential return on investment. Can you make the income you want with this franchise?

Answers to these "Questions to Ask About a Franchise" are essential before making any decisions. It is also important to speak with current franchisees and consult with a franchise attorney and accountant before signing any franchise agreement.

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