Key steps before you buy a franchise

It is very important to check for yourself whether the franchise is a good deal or not. There are some important things every prospective franchisee should do to help protect your investment.

Imagine yourself as a franchisee. There will be rules set by your franchisor that can tell you what you can and can’t do. Think about whether franchising suits you by doing the ‘Is franchising for me?’ online course and reading our case studies.

Buying a franchise: key steps

Get professional advice

Get independent legal, accounting and business advice about the franchise. One type of advice may not be enough to properly inform you. Read our case studies to see how franchisees can be affected by not having sought advice on the different aspects of running a franchise before signing up.

Understand your disclosure document

Read your disclosure document and take the time to understand the information in it. Our Quick guide to a franchise disclosure document can help you understand this important document.

There can be a lot to take in, so as you're moving through this process there are a couple of things to keep in mind:

  • Don’t be rushed into signing a franchise agreement and make sure you understand what you are agreeing to.
  • Don’t rely on what a franchise salesperson tells you. Ensure all claims are written down or preferably have them included in the franchise agreement.

Speak to current and former franchisees

They can help you understand the strengths and the weaknesses of a franchise and what it is like in real life. The disclosure document should include contact details for current and former franchisees.

When you speak to other franchisees it’s important to ask them the right questions so you can understand what franchising is like, and get information about the franchise system you are thinking about joining.  

Good questions to ask current and former franchisees

  • If you could go back in time, would you buy a franchise?
  • How long did it take you to make a profit?
  • How many hours do you work each week?
  • Have you recovered your initial investment?
  • Does the franchisor provide ongoing support and training?
  • What is your relationship like with the franchisor?
  • What do you wish you had known before buying a franchise?
  • What would you do differently?
  • Why did you leave the franchise system? [for ex-franchisees]

More information

Buying a franchise

Do the ‘Is franchising for me?’ online course