
A simple guide to the essentials you need to check before you buy.
- Are you confident in the franchisor?
- Have you seen a disclosure document?
- Is the franchisor compliant with the Franchising Code of Conduct?
- Have you run a credit check on the franchisor?
- Does the franchisor have a history of litigation?
- For an existing business, have you seen current financial statements (balance sheets, profit and loss, tax returns)?
- For a brand new site, do you have sales and profit examples and know the method behind the calculations?
- Have you evaluated the financial returns?
- Do you know all the expenses franchisees are required to pay?
- Do you know how the royalties are calculated?
- Have you worked out your operating costs?
- Do you know the term of the agreement?
- Do you need a permit or licence to operate the business?
- Have you checked the lease? Is there a right to renew?
- What are the store fit-out costs?
- Are you working within a territory? If so is the area exclusive?
- Are you restricted in your product purchase?
- What are the franchisee and franchisor obligations?
- Is the franchisor embracing the digital environment and social media?
- What training is available and who pays for it?
- Who owns the intellectual property and what is licensed to the franchisee?
- What marketing will the franchisor implement?
- What marketing is your responsibility?
- What is the dispute resolution process?
- Have you spoken to former and current franchisees about the business?
- What restrictions are there when selling on the franchised business?
- How can the franchisor or franchisee terminate the franchise agreement?