Choosing the Right Franchise: Questions You Should Be Asking

When you are considering buying a franchise, you are not just purchasing a brand or a business model. You are entering a long-term relationship that will shape your professional life and financial future for years to come. Franchising can shorten the learning curve and offer the advantages of a tested system, recognized brand, and centralized support. But it also requires discipline, compliance, and ongoing payments to the franchisor.

That’s why asking the right questions up front is essential. This guide walks through the most important questions to ask, why each matters, where to find answers, and how to evaluate those answers so you can make an informed choice that fits your goals, skills, and resources.

The Partnership Mindset: Franchising as a Mutual Fit

Perhaps the most overlooked factor in franchise selection is cultural fit. Franchising is a partnership, not a one-sided sale. The franchisor provides systems, training, and brand value, but you provide the local energy, capital, and execution.

Ask yourself:

• Do I align with the franchisor’s values and vision?

• Does the company communicate openly and consistently?

• Are franchisees treated as partners or simply as sources of royalties?

• Would I trust these people to have my back when challenges arise?

Equally, be transparent with the franchisor about your expectations. If you want a semi-absentee model, confirm they have systems to support it. If you’re highly entrepreneurial, make sure they allow some flexibility in operations.

When franchisors and franchisees treat each other as partners, both sides thrive. When either side sees the relationship as transactional, conflict and failure are more likely.

Understand the Regulatory and Disclosure Basics First

In the United States, franchisors are legally required to provide prospective franchisees with a Franchise Disclosure Document (FDD). The FDD contains 23 items that cover critical information such as:

• The franchisor’s history and background

• Fees and ongoing royalties

• Litigation and bankruptcy records

• Initial and ongoing costs

• Contact information for current and former franchisees

You must receive the FDD at least 14 days before signing any agreement or paying money. Treat it as a due diligence document, not just paperwork. Consider hiring an experienced franchise attorney to help you review it in detail. The Federal Trade Commission and state regulators designed these rules to protect buyers, but protection only works if you take the time to read and understand the document.

Know Your Own Goals and Constraints

Before you even speak to a franchisor, clarify what you want from this investment. Ask yourself:

• Do I want to be a full-time owner-operator, or am I looking for a semi-passive investment?

• How many hours per week can I realistically commit?

• How long do I want to run this business—5, 10, or 20 years?

• What is my available cash on hand and borrowing capacity?

• Does my family support the time and financial commitment?

Many franchise failures result from a mismatch between the owner’s goals and the franchise model. For example, some systems thrive only when the owner is deeply involved day-to-day, while others are designed for multi-unit operators who hire managers. Clarity about your personal goals is the foundation for every decision that follows.

Financials and Capital Requirements

Every dollar matters. You’ll want to understand:

• Initial franchise fee

• Build-out or leasehold improvements

• Equipment and inventory

• Grand opening marketing

• Working capital requirements

Ask about:

• Royalties

• Marketing contributions

• Technology or software fees

• Renewal and transfer fees

• Required vendor purchases

Your cash flow will depend on these deductions, so make sure you model realistic owner pay after all fees are subtracted.

Confirm the Franchisor’s Financial Health

Your success is tied to the franchisor’s stability. Ask for:

• Three years of corporate financials (if available)

• Bankruptcy history of the franchisor or executives

• Information on how fast the brand is expanding

Growth is not always a good sign. Rapid expansion without investment in training and support staff can be risky. On the other hand, stagnation may signal deeper problems. Look for sustainable growth paired with strong support infrastructure.

Understand the Franchisee–Franchisor Relationship

A franchise is not just a transaction—it’s an ongoing relationship. Ask:

• What initial and ongoing training is offered?

• What kind of field support can I expect after opening?

• How does the franchisor assist with marketing and customer acquisition?

• Who helps with site selection and lease negotiations?

• How are franchisee success and KPIs measured?

Support is one of the most valuable things you are paying for. A strong franchisor invests in your long-term success, not just in selling more units.

Speak to Franchisees and Former Franchisees

The FDD includes contact information for both current and former franchisees—use it. Prepare a list of questions, such as:

• Was the training effective?

• How responsive is the franchisor to problems?

• Are the financial projections accurate?

• What are the biggest challenges in day-to-day operations?

• With everything you know now, would you invest again?

Don’t skip former franchisees. If multiple owners left the system in a particular region, ask why. Their perspective can reveal issues not obvious on paper.

Territory, Competition, and Market Saturation

Ask how the franchisor defines and protects territories. Questions to consider:

• Do I get exclusive rights to a geographic area?

• Can the franchisor open another unit nearby?

• What happens to territory rights at renewal or resale?

Also, analyze local competition. A strong brand reputation can help, but even well-known franchises struggle in oversaturated markets.

Real Estate and Site Selection

Real estate is often a make-or-break factor. Ask:

• Does the franchisor assist with site selection?

• Will they approve your location before you sign a lease?

• Who negotiates lease terms?

• What happens if the franchisor rejects a site after you’ve made deposits?

Site selection support is a key indicator of franchisor maturity. If your business depends on foot traffic, ensure the franchisor has robust systems for securing prime locations.

Operations, Technology, and Supply Chain

Operational systems are the backbone of consistency. Ask:

• What software systems (POS, CRM, scheduling) are required?

• How often are systems updated?

• Are there ongoing technology fees?

• What are the supply chain requirements?

• Do you have to buy from approved vendors only?

If supply costs are inflated or systems are outdated, your margins will shrink quickly.

Marketing, Branding, and Local Lead Generation

Marketing is a common area of tension between franchisors and franchisees. Clarify:

• How is the national marketing fund managed?

• What results have national campaigns produced historically?

• What is my responsibility for local marketing?

• Do I get a playbook for local advertising?

• How much creative control will I have?

The best franchisors are transparent about how marketing dollars are spent and provide measurable data showing impact.

Legal Terms, Contract Length, and Renewal Rights

Never sign without having an attorney review the franchise agreement. Pay close attention to:

• Length of the contract and renewal options

• Conditions for territory rights on renewal

• Non-compete clauses that survive termination

• Dispute resolution procedures (arbitration, litigation, etc.)

• Liquidated damages and penalties

Red flags include high-pressure sales tactics, refusal to provide documentation, or vague financial promises.

Training, Staffing, and Human Resources

Ask about the franchise’s approach to staffing:

• How many employees are typically required?

• Does the franchisor provide training and onboarding materials?

• How long until staff reach full productivity?

• What support exists for recruiting and retention?

For service-based businesses, staffing is often the hardest part of operations. The more support the franchisor provides here, the better.

Evaluate Exit Options and Resale Value

Think about your exit strategy before you enter. Ask:

• What are the terms for selling your franchise?

• Does the franchisor have the right to deny a buyer?

• Are there transfer fees or restrictions?

• What have past resales in this system sold for?

A franchise with a healthy resale market makes it easier to recover your investment later.

Franchise Economics and Realistic Owner Pay

Build multiple financial models, some with conservative assumptions:

• Assume revenues are 20–30% lower than projections

• Assume expenses are 10–15% higher than expected

• Stress test cash flow for slower months

If the business only works under a “best-case scenario,” it may not be sustainable. Lenders will also expect to see conservative financial projections before approving loans.

Beware of Shiny Trends and Overhyped Returns

Trendy concepts—celebrity-backed restaurants, viral brands, or “next big thing” industries—can be tempting. But trends don’t guarantee staying power. Always ask:

• How stable is consumer demand?

• What are the brand’s unit-level economics over multiple years?

• Can the concept survive economic downturns?

Independent third-party research is one of your best tools for separating hype from sustainable opportunity.

Decision Tools

To organize your due diligence:

1. Create a checklist of the questions outlined in this article.

2. Score each franchise opportunity based on how well it meets your needs.

3. Interview franchisees across multiple markets.

4. Visit operating locations to see customer flow and operations.

5. Hire professionals (attorney, accountant, consultant) to review documents and financials.

Good franchisors welcome rigorous questions, provide transparent documentation, and connect you with existing franchisees. If a brand pressures you to move quickly or avoids tough questions, walk away.

Final Thoughts

Choosing the right franchise is one of the most significant business decisions you will make. By asking detailed questions about financials, operations, legal terms, marketing, and support—and by viewing the relationship as a partnership—you increase your chances of success.

Franchising is not about buying a job or a shortcut to wealth. It is about entering a proven system where your hard work, combined with franchisor support, creates an opportunity for long-term growth. When you treat due diligence seriously and focus on mutual fit, franchising can be a powerful and rewarding path to business ownership.