Franchise sales teams are professional persuaders. Their job is to get you excited about the brand, walk you through the discovery process, and guide you toward a signed agreement. They're good at it.
Your job is different. Your job is to make sure the investment makes sense -- financially, contractually, and personally -- before you commit. The right questions are your best tool.
Here are 15 questions that every franchise buyer should have answered before signing anything.
Financial Questions
1. "What is the total all-in cost to open, including working capital for the first 12 months?"
Item 7 of the FDD provides estimated initial investment ranges, but they often understate the true cost. Make sure your calculation includes:
- Franchise fee
- Build-out and equipment
- Initial inventory
- Insurance deposits
- Working capital until the business is cash-flow positive (not just until opening day)
The gap between the FDD's estimate and reality is where many franchisees run into trouble.
2. "What percentage of franchisees break even within 18 months?"
This question forces the franchisor to move beyond revenue averages and address profitability timelines. If they can't answer it or won't, that's informative.
3. "How have royalty rates and fees changed over the past 10 years?"
A franchise with a 5% royalty today may have started at 4% and increased it twice. Understanding the fee trajectory tells you what to expect during your term. Check the current franchise agreement against older versions if possible.
4. "What are the top three reasons franchisees leave the system?"
Item 20 shows how many franchisees left, but not why. This question gets at the root causes. Common answers include underperformance, disagreements with corporate, and inability to sell the business at a fair price.
5. "What does a franchisee's P&L actually look like at the median revenue level?"
If the franchisor provides Item 19 data, ask them to walk through a realistic profit-and-loss statement using those numbers. Revenue means nothing without the expense structure beneath it.
Operational Questions
6. "How many hours per week does a typical owner-operator work in years one, three, and five?"
Some franchises are semi-absentee from day one. Others require 70-hour weeks for years. Your lifestyle expectations need to match the operational reality.
7. "What happens when I need help and my field support representative isn't available?"
Every franchisor promises great support during the sales process. What you need to know is what the support structure actually looks like at scale. How many franchisees does each support rep cover? What's the typical response time for operational issues?
8. "What technology systems am I required to use, and what do they cost?"
Technology fees are one of the fastest-growing franchise costs. Point-of-sale systems, CRM platforms, proprietary ordering systems, and required software subscriptions can add thousands per month in costs that weren't prominent a decade ago.
9. "Can I see the current operations manual, or at least the table of contents?"
The operations manual is the playbook for running your business. Some are comprehensive and well-maintained. Others are outdated or thin. You can't usually see the full manual before signing, but asking about its scope and last update date is reasonable.
Legal and Contractual Questions
10. "Under what circumstances can you terminate my franchise, and which are non-curable?"
Termination clauses define the worst-case scenario. Non-curable defaults (where you can't fix the problem -- you're just out) are particularly important to understand. FranchiseLens scores termination clauses across all franchises on a 1-5 franchisee-friendliness scale.
11. "What are the renewal terms, and will I sign the then-current franchise agreement?"
Many franchise agreements last 10 years. At renewal, some systems let you continue under your original terms. Others require you to sign whatever the current agreement says -- which may include higher fees, different territory terms, or additional obligations.
12. "If I want to sell my franchise in five years, what's the process and what will it cost?"
Transfer rights determine the liquidity of your investment. Key factors: right of first refusal (can the franchisor buy it instead?), transfer fees, buyer qualification process, and whether the buyer signs a new agreement.
13. "What is the non-compete radius and duration after termination?"
The post-termination non-compete determines what you can do if the franchise doesn't work out. A clause preventing you from working in your industry within 25 miles for three years has a very different impact than 5 miles for one year.
Strategic Questions
14. "What is the franchisor's growth strategy for the next five years, and how does it affect existing franchisees?"
Rapid expansion can dilute existing territories. New formats (express, delivery-only) can cannibalize full-service locations. Understanding the growth plan helps you assess whether the franchisor's interests align with yours.
15. "What has changed in the FDD over the past three years?"
FDDs are updated annually. Comparing current and past versions reveals trends in fees, litigation, unit counts, and contractual terms. If litigation has tripled and unit closures have doubled, that's a pattern -- even if the current-year snapshot looks acceptable.
FranchiseLens tracks FDD changes over time where filings are available, so you can see these trends without manually comparing documents.
How to Use These Questions
Don't ask all 15 questions in a single conversation. Spread them across the discovery process:
- Questions 1-5 during your initial financial analysis
- Questions 6-9 during operational discovery and validation
- Questions 10-13 with your franchise attorney during legal review
- Questions 14-15 during your final due diligence before signing
The answers you get -- and especially the questions the franchisor avoids -- will tell you more than any marketing brochure ever could.
Ready to start your research with data instead of a sales pitch? Browse franchise analyses on FranchiseLens and see how your target franchise stacks up across 100+ metrics.