- Understanding your goals, finances, risk tolerance, and willingness to follow a system helps ensure the franchise fits your lifestyle and strengths.
- Dig into franchise fees, ongoing costs, support, track record, territory rights, and speak with current and former franchisees to get a realistic picture of the business.
- Structuring finance properly, stress-testing earnings forecasts, and preparing for risks with the help of a financial advisor or broker can set you up for long-term success.
Buying a franchise can look like the perfect shortcut to running your own business. You get the benefit of a proven brand, existing systems that work, and a ready-made support network.
But it’s not a guaranteed recipe for success—and it’s certainly not for everyone. So, how do you know if it is for you? It's all about understanding your goals, finances, and willingness to operate within a system, and doing your due diligence.
Here are 14 questions to ask before buying a franchise—and why each one matters.
Questions to ask yourself
Before you speak to anyone else, it's important to check in with yourself. Are you genuinely ready to take on a franchise—both personally and financially?
Why do I want to buy a franchise?
Your 'why' is more important than you may realise. It helps you filter out opportunities that perhaps look good on paper but don't align with your goals. So, are you chasing flexibility? The safety of a big brand name? Or perhaps long-term growth and resale value?
Understanding your motivations will guide you towards a franchise model that fits your skills and lifestyle.
Do I have the capital to get started?
Buying a franchise requires an upfront franchise fee, but the costs rarely end there. From fit-outs to inventory, legal fees, training costs, and a buffer for unforeseen expenses, you'll need enough capital for the first few months while the business ramps up.
It's easy to underestimate your costs, and doing so can lead to cash flow problems early on—not the best start to your franchising venture.
Be realistic about the true cost of your franchise, and you won’t have to worry about being blindsided.
Am I comfortable following someone else’s rules?
A franchise isn’t a blank canvas. You're not starting from ground zero but rather taking on a brand that someone else spent time developing.
In other words, there are established branding, pricing, suppliers, marketing campaigns, and sometimes even rostering or store layout rules you have to follow.
This can be a blessing if you like operating within a system, but entrepreneurial minds who value freedom may find all the rules a bit restrictive. Knowing them upfront helps you decide if the franchise is right for you.
Do I have the right skills and mindset?
Even with a proven brand and systems, the success of the franchise still depends on you.
You’ll be the one managing staff, dealing with customers, keeping an eye on cash flow, handling compliance—you get the gist. While this may not require deep industry knowledge, you do need resilience, problem-solving ability, and a willingness to work hard, especially in the beginning stages.
Questions to ask the franchisor
You've decided that yes, buying a franchise is the right step for you. Now, it's time to talk to the franchisor, the person who owns the business and is selling a branch.
This is where you dig into the fine print and separate glossy sales pitches from reality.
What’s included in the franchise fee?
Some franchisors cover a big chunk of expenses in the initial fee—think training, marketing materials, fit-out, and equipment. Others give you the right to operate under the brand name but leave you to pay for everything else.
It's really important to clarify exactly what you're paying for with the franchise fee, or you risk underestimating your total start-up cost by tens of thousands of dollars.
What ongoing fees will I need to pay?
Beyond the upfront cost, there are typically extra fees that come with buying a franchise. Royalties, marketing levies, tech system charges, and product development fees, to name a few.
Even if your margins look healthy, these can add up quicker than you realise and eat into profits if you don’t factor them in.
How long is the franchise agreement, and what happens at the end?
Franchise agreements are not forever. They usually last 5–10 years, which begs the question: what happens at the end? Can you renew, sell the business, or walk away cleanly?
Pay special attention to any exit fees or limitations around your ability to sell to a third party. Both can greatly impact your long-term financial planning and potential resale value.
What level of support do you provide?
Support from franchisors can range from extensive—helping you with site selection, ongoing training, marketing campaigns, and operational assistance—to... well, almost non-existent.
For first-time buyers, a strong support system can make a huge difference.
What’s the franchisor’s track record?
A shiny brand doesn’t always mean a stable one. You should always take time to look into the franchisor’s track record before making any investments. This means researching:
- How many outlets have succeeded
- How many have failed
- Whether there have been legal disputes
What territories are available, and how exclusive are they?
Territory rights can determine how much competition you’ll face. If exclusivity is vague or not guaranteed, you could end up with another outlet opening nearby and cutting into your market share.
Can I speak to current and former franchisees?
No one knows the business like someone running it. Current franchisees have been where you are, and they can tell you what day-to-day operations are really like and whether the support matches the promises.
Former franchisees are worth chatting with too, especially to understand why they left. Was it financial strain? Lack of support? Or was it simply time to move on? Their stories will give you a reality check that a brochure can’t.
Questions to ask your financial advisor
Buying a franchise is a huge financial feat, so it’s always smart to get independent advice.
What's the realistic earning potential?
In your conversations with the franchisor, they may have provided you with financial forecasts. These are useful, but there's a caveat: they may be based on “best case” scenarios. So, what's the forecast for conservative, realistic, and worst-case scenarios?
Your accountant can stress-test those figures, adjust them for local conditions, and help you figure out how long, realistically, it will take to break even and turn a profit.
How should I structure my finance?
There’s no one-size-fits-all answer. You might need a combination of a franchise loan, an unsecured business loan, equipment finance, and a working capital facility.
It's important you structure this correctly, since it affects your repayment obligations, tax deductions, and overall cash flow.
Our team of brokers can help you figure out what finance solutions are best for your situation so you can maximise cash flow and minimise risk. Get a free quote today.
What risks should I plan for?
Every business carries risk, and franchises are no exception. Economic downturns, rising costs, changing consumer tastes, or disputes with the franchisor can all impact your profitability.
While a lot of these are out of your control, a financial advisor can help you plan contingencies so you’re not caught off guard. You know, just in case.
Finance your franchise with Valiant
Most franchisees need funding to cover the costs of buying a franchise (and getting it off the ground). That’s exactly where Valiant comes in. With access to 90+ lenders, we can match you with the right solution to make your franchise a success.
Whether you need a franchise loan, equipment finance, or a working capital buffer, we’ll help you compare options, streamline approvals, and set yourself up for success.
Ready to take the next step? Get a quote and let us find the right loan for your franchise journey.
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