Is the franchise you’re interested in a member of the FCA and other questions a potential franchisee must ask

Below are additional fundamental points you will need to consider when deciding whether to buy into a franchising system:

How long has the franchisor been in business?

Is the franchisor a member of the FCA (Franchise Council of Australia)?

Is there a minimum gross revenue? If so, what is it?

Do you receive an exclusive territory or location?

Are there any restrictions on you selling your business in the future?

What is the assignment fee if you do sell?

Has the franchisor undertaken sufficient market research in your area?

Does the franchisor provide any projections of earnings?

Does the franchisor offer any form of income guarantee? If so, what is it?

Does the franchisor protect the exposure of the intellectual property (ie. confidentiality undertakings)?

Is there provision for growth or expansion within your territory?

Does the franchisor ask for records of your franchise’s performance?

If the franchisor provides a ‘turnkey’ site, are they making a profit on the fit out? If so, how much, and will they share it with you?

What is the initial franchise term?

What renewal terms are available?

What charges or restrictions are placed upon renewal?

Does the franchisor give you an established customer base?

Does the franchisor devote their full time to the franchise business? If not, what other businesses do they run?

Does the franchisor ask for and follow up references on you?

Who are the main competitors to the franchise business?

In relation to these competitors, where does the franchisor believe they are currently placed in the market?

Does the franchise system offer advantages over its competitors?

The decision relating to buying a franchise is a huge one, so tread carefully! Do your research, talk to the right professionals and always remember: there is no such thing as asking too many questions!

Read more on buying a franchise and running a franchise.