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?