5 Things to Consider When Purchasing a Franchise

Owning a franchise can be an exciting way to start or expand your business journey. Franchises offer the benefit of a proven business model, brand recognition, and operational support. However, buying a franchise doesn’t guarantee success. Like any business decision, it requires research, planning, and clear understanding.
Before you sign on the dotted line, here are five critical things to consider when purchasing a franchise.

1. Understand the True Cost of Ownership

Franchise ownership involves more than just the initial franchise fee. There are often ongoing royalty fees, marketing fund contributions, and required purchases from approved vendors. These costs can significantly impact profitability.

Key considerations:

• Initial investment: Includes franchise fees, equipment, build-out costs, inventory, and working capital.
• Ongoing fees: Typically a percentage of revenue paid monthly or quarterly.
• Hidden costs: Training, local advertising, technology systems, or required renovations.

Tip: Ask the franchisor for a full list of fees and obligations, and build a financial projection that includes both fixed and variable expenses. Understanding your break-even point early can prevent unpleasant surprises later.

2. Evaluate the Level of Support and Training

One of the biggest advantages of buying a franchise is the access to established systems and support. However, not all franchisors provide the same level of assistance.

Ask these questions:

• What training is provided before and after opening?
• How accessible is the franchisor’s leadership or support team?
• Are there regional or peer support groups?

A strong franchise system offers hands-on training, marketing tools, technology platforms, and continuous learning opportunities. The more support you receive, the more likely you are to succeed — especially in your first year.

3. Know the Brand Reputation and Market Potential

You’re not just buying a business — you’re buying a brand. Do your homework on how the brand is perceived and whether there’s demand for its products or services in your area.

Evaluate these factors:

• Customer reviews and brand reputation online
• Local and national competition
• Market saturation — how many existing franchise locations are nearby?
• Longevity and stability of the brand

If possible, talk to current and former franchise owners. They can provide unfiltered insight into the company’s culture, customer base, and real-world profitability.

4. Review the Franchise Agreement Carefully

Your franchise agreement is a legally binding contract that outlines your rights, responsibilities, and restrictions. It’s vital to review this document in detail — ideally with a franchise attorney or business consultant.

Focus on:

• Length of the agreement and renewal terms
• Territory rights (exclusive or shared)
• Exit clauses — how can you sell or terminate your franchise?
• Non-compete clauses or restrictions on other business activities

Don’t rush this step. Many franchisees later realize that contractual limitations restrict their flexibility or profitability. A professional review helps you avoid costly mistakes and ensures you fully understand your obligations.

5. Assess Your Fit as an Owner

Even with a great brand and strong support, the most important success factor is you. Every franchise system has its own culture, pace, and level of control.

Ask yourself:

• Do I work well following someone else’s systems and rules?
• Am I passionate about this brand and product?
• Can I manage people, finances, and daily operations effectively?

Buying a franchise is not a “set it and forget it” investment. It requires active involvement, consistent leadership, and dedication. Choose a franchise that aligns with your values, lifestyle, and long-term goals.

Final Thoughts

Purchasing a franchise can be an incredible opportunity — but only when you make an informed decision. Take your time, research thoroughly, and lean on trusted advisors like business consultants, attorneys, and accountants before making your move.

Remember, you’re not just buying a business — you’re investing in your future. The best franchise owners are those who combine passion, due diligence, and discipline.

Don’t just survive, THRIVE!