Questions to Ask a Franchisor Before Signing a Contract

Set the Tone Before You Ask

Signing a franchise agreement is rarely a short commitment. Most UK agreements run for five years or more, and some roll on automatically unless you give notice at exactly the right moment. That is why the questions you ask before signing matter as much as the answers themselves. A good franchisor will welcome scrutiny and give you straight answers, in writing. A defensive one will tell you the questions are already covered in the agreement — which is precisely when you should slow down.

Ask for a copy of the franchise agreement at least two weeks before any meeting, and insist on written answers to the points below. Then book a separate call with two or three existing franchisees, and, if you can, one who has recently left the network. Their tone will tell you plenty.

Training, Launch and the First Six Months

Initial training is where new franchisees either gain confidence or quietly panic. Vague promises of “full training and support” mean nothing on their own, so pin down the detail.

• How many days of training are included, where is it held, and who delivers it — head office staff, or a franchisee who has been in the network for years?
• What happens after the formal training ends? Is there a structured first-week or first-month programme, or are you expected to find your own feet?
• Is there on-site support during launch, and how many days does that cover? Ask who pays for travel and accommodation.
• What ongoing training is available — refresher courses, new product or service updates, annual conferences — and is any of it chargeable?

If the answer is “it depends on the individual”, ask them to describe the last three franchisees who launched. That usually produces a far more honest picture.

Ongoing Support and the Day-to-Day Relationship

The launch is the shop window; the years afterwards are the relationship. Find out how much contact you will genuinely have.

• How often will a field manager or business development contact visit your premises? Monthly, quarterly, or “as required”? Get a minimum expectation in writing.
• Who is your first point of contact for day-to-day questions, and what are their working hours and response times?
• Is there a franchisee advisory council or forum, and does it have any real influence over fees, marketing or system changes?
• What is the process for resolving disputes before it becomes a formal matter? A clear, staged process is a sign of a mature organisation.

Fees, Charges and Hidden Costs

Every franchisor charges differently, so compare like for like. Ask for a full schedule of fees in writing — not a verbal summary — and work through it line by line with your accountant.

• What is the initial franchise fee, what exactly does it cover, and is it refundable in any circumstances?
• What ongoing fees apply? Management service fees, royalties, marketing fund contributions, or a mix — and are they calculated on gross or net turnover?
• Is there a national marketing fund, how much is contributed annually, and how is it spent? Ask for a breakdown.
• What are the minimum stock, equipment or vehicle requirements, and must you buy them from the franchisor or approved suppliers at a set price?
• Which costs are compulsory but not obvious — insurance, software licences, branding updates, point-of-sale systems, or annual fees for using the brand?

Then ask the difficult one: what happens if I fall behind on fees? A franchisor’s approach to arrears and payment plans reveals a great deal about how they treat people.

Territory, Exclusivity and Local Proof

If you are buying into a local franchise, your patch is your livelihood. Be precise about what you are actually being granted.

• Is my territory exclusive, and how is it defined — postcodes, radius, population, or customer type? What happens if the franchisor opens an online channel or a franchisee sells into your area?
• Can I expand later into neighbouring territory, and on what terms?
• What are the performance targets? Are there minimum sales figures, and what happens if you miss them?
• How do existing franchisees in similar territories perform? Ask for anonymised figures, not just the best-case example.

Exit Terms, Renewal and Selling Your Business

Few people think about leaving on day one, but the exit terms shape the value of everything you build. Read them twice.

• How long is the term, and what are the renewal conditions and renewal fees?
• Can I sell my franchise, and does the franchisor have the right of first refusal? What transfer fee applies, and who covers the buyer’s training?
• What notice must I give if I want to leave, and are there penalties or ongoing fees after termination?
• What restrictions apply afterwards — a non-compete radius, a time limit, a ban on contacting customers? Make sure these are reasonable for your area.
• How many franchisees left in the past two years, and why? A franchisor who can answer this openly is one worth working with.

Finally, take the agreement to a solicitor who specialises in franchising before you sign, and keep every answer you have been given in writing. If a promise is not in the contract, treat it as a hope rather than a term. The questions feel awkward now, but they are far easier than the ones you would be asking a year into a franchise that was never quite the right fit.