Most buyers evaluate the franchise. Almost nobody evaluates whether they are a good fit for franchising. Eight questions. An honest answer.
Question 1 of 8
Beyond the initial investment, how much working capital can you sustain without income for 12 months?
Most franchises require 6 to 18 months to reach break-even. Working capital is what keeps you operational during that period. Item 7 of the FDD typically underestimates this figure.
Question 2 of 8
What does your target weekly schedule look like for the first two years?
Franchise ownership, especially in service and food categories, often requires 50 to 70 hours per week in the first two years. Understanding your actual availability before evaluating any specific brand is critical.
Question 3 of 8
What is your most relevant operational experience in the category you are considering?
Franchisors provide operational systems, but franchisees with prior category experience consistently outperform those entering an entirely new industry. This gap shows up most in Year 1 and Year 2.
Question 4 of 8
If this franchise performed at lower-quartile results for 18 months, what would happen to your household?
Lower-quartile performance is the realistic downside scenario. Most buyers plan for median outcomes. Buyers who survive difficult early periods are the ones who planned for the lower quartile first.
Question 5 of 8
How do you respond to operating within a system that limits your ability to make independent business decisions?
Franchisors control pricing, vendors, marketing, product mix, and operational procedures. Franchisees who chafe against these restrictions report lower satisfaction regardless of financial performance.
Question 6 of 8
How many unscripted conversations have you had with current and former franchisees in the system you are evaluating?
Franchisor-arranged reference calls do not count. Unscripted conversations with franchisees you contacted directly through the Item 20 list are the only reliable source of operational reality.
Question 7 of 8
How closely have you reviewed the actual FDD document?
Reading a broker summary is not FDD review. Items 3 (litigation), 12 (territory), and 19 (financial performance) require specific focused attention. Most buyers skim; thorough buyers read clause by clause.
Question 8 of 8
Who else is involved in or affected by this investment decision?
Franchise ownership significantly affects households. Misaligned expectations between partners or family members are among the most commonly cited sources of franchise failure unrelated to business performance.
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