One of the most common mistakes first-time franchise buyers make is to ask the franchisor ‘how much money will I make,’ before posing any other question.

Here’s why this question is a rookie error.

1. First up, it signals the wrong priorities

Of course it’s important to discover the earnings potential. However, franchisors first of all want to see your interest in the business and a commitment to hard work.

If you lead with this question, it suggests you are driven by the financial return rather than a desire to work in and with the brand.

A franchise buyer who asks about profit before asking about operations, territory, or training signals that they may lack understanding of what running a business entails.

2. There are rules about earnings claims

Franchising is highly regulated in Australia, and the Franchising Code of Conduct is a mandatory industry code, enforced by the ACCC.

This means a franchisor who shares financial performance information must back it up with reasonable grounds and provide the assumptions behind the projection or statement. So, many franchisors, conscious of their liability, will not provide specific figures.

Once you are committed enough to the brand to pursue the opportunity, you can turn to the disclosure document and franchise agreement for details about financials and upcoming expenses.

Turn to former and current franchisees (whose details will be in the disclosure document) to get real-life feedback on costs.

3. It depends on you

Any financial data shared has a big caveat – how effectively will you run the business? Two franchisees operating within the same brand with the same sales levels can have completely different bottom-line profits based on:

• Staff training, management and staff retention
• Rental costs and overheads
• Operational efficiency and waste control
• Local community marketing and sales effort

Revenue does not equal profit. So asking a franchisor to predict your income ignores the biggest variable in the equation: your performance.

What you could ask instead

Shift your focus from income to ask about unit economics, operational metrics, and system support.

• What are the key cost drivers in a typical unit?
• What percentage of revenue traditionally goes toward labour and cost of goods?
• What does the typical timeline look like from signing to opening?
• How long does an average unit take to reach break-even?

Choose your questions carefully to ensure you get useful, timely information, and don’t damage your credibility as a franchise buyer.