Buying your first franchise

The checklist, in order

1. Get the information statement. The franchisor must give it within 7 days of you expressing interest, before any other document. It is general, but its absence tells you something about the franchisor's systems.
2. Get the full document set and start the 14 days. Disclosure document, the agreement in the form it will be signed, a copy of the Code, and any lease documents.
3. Call the franchisees. The disclosure document lists current franchisees and those who have left recently. Call at least six current and as many former as you can reach. This is the single most informative hour you will spend.
4. Model every dollar. Initial fee, fit-out, equipment, opening stock, training, travel, bond, working capital for six months, royalty, marketing levy, technology fee, rent, wages, insurance. Then ask what you are left with, and whether it beats what you could earn working for someone else.
5. Check the territory. Exclusive or not, and whether the franchisor may open corporate sites, sell online into your area, or supply national accounts within it.
6. Check the exit. What it costs and what consents are needed to sell, what happens at the end of the term, and what restraint applies afterwards.
7. Get advice. Legal on the documents, accounting on the numbers, and ideally a conversation with someone who has operated in that industry.
8. Then sign, or do not. And if you sign and something surfaces immediately, you have 14 days of cooling off.

Questions to ask former franchisees

Current franchisees have a reason to be positive. Former franchisees do not, which makes them the most useful people in the disclosure document.

• What did you actually take home in year one, and in year three.
• How many hours a week were you working, and were you able to take holidays.
• What did the fit-out really cost compared with the estimate you were given.
• Did the franchisor require capital expenditure you had not planned for.
• How was the franchisor when something went wrong: a bad month, a staffing problem, a landlord dispute.
• Was the marketing levy spent on anything you could see in your own area.
• Why did you leave, and how easy was it to sell.
• Would you buy it again knowing what you know now.

If the disclosure document lists a large number of departures relative to the size of the network, that is data, not noise. Ask what happened to each of those sites.

The five things first-time buyers underestimate

Working capital. The business will not be profitable in month one. Most failures we see are cash flow failures in the first year, not bad concepts.

The personal guarantee. If you franchise through a company, you will almost certainly be asked to guarantee its obligations personally, and often the lease as well. That is your house behind a business you are running under someone else's rules. Ask whether it can be capped and whether it ends on a permitted sale.

Required capital expenditure. Refits and technology upgrades during the term. Significant capital expenditure must be disclosed, with the reason, the amount, the timing, the expected benefits and the risks. Read that section carefully, and note that for agreements from 1 November 2025 the franchisor must give you a reasonable opportunity to make a return on an investment it requires.

The restraint after you leave. A post-term restraint can stop you working in the industry you have just spent five years learning. Since 1 April 2025 a restraint is unenforceable in defined circumstances where you sought renewal on substantially the same terms, met the conditions, were refused and were not paid genuine compensation for goodwill.

How hard it is to sell. You cannot simply sell to whoever will pay. The franchisor must consent, the buyer must be approved and will usually have to sign the current agreement rather than yours, and transfer fees apply. Ask current franchisees how long a sale took.

What a review from us looks like

We review the disclosure document and the franchise agreement together and give you a written report in plain English. It says which terms are standard for the sector, which are unusual, which we would want changed, and which are simply the price of entry to that system.

We do not tell you whether the business is a good investment. That is a question for your accountant and for the numbers you gather from other franchisees. What we do tell you is what you are actually agreeing to, and what happens on the worst realistic day.

The review is quoted as a fixed fee range and it is designed to land inside your 14 day period, so tell us when you received the documents. Start with the disclosure document and the franchise agreement, and if there is already a problem, go to franchise disputes.