15 Questions to Ask a Franchisor Before You Buy a Franchise

15 Questions to Ask a Franchisor Before You Buy a Franchise

The best franchise decisions come from asking hard questions early. Use this checklist with any franchisor, Qargo Coffee included, and check every answer against the Franchise Disclosure Document (FDD).

Questions about the franchisor

  1. How long have you been franchising, and how many units are open today? (Check FDD Item 20.)
  2. Who are the executives, and what is their background? (Item 2.)
  3. Has the company or its leadership been involved in litigation or government actions? (Item 3.) Ask them to explain each one.

Questions about the money

  1. What is the total investment range, and what drives the high end? (Item 7.)
  2. What are the ongoing royalty, marketing and technology fees? (Item 6.)
  3. Do you share any sales or earnings data? (Item 19.) Earnings claims outside Item 19 are a red flag.
  4. Do you offer financing, or work with lenders who know your brand?

Questions about support

  1. What training do owners and staff get before opening? (Item 11.)
  2. How do you help with site selection, lease negotiation and build-out?
  3. What ongoing support comes after opening, such as field visits, marketing and purchasing?

Questions about territory and the agreement

  1. Will I get a protected territory? (Item 12.)
  2. How long is the agreement, and what are the renewal, transfer and termination terms? (Item 17.)

Questions about other franchisees

  1. May I call current and former franchisees? (Item 20 lists their contacts.)
  2. How many units have closed or changed hands in the past three years, and why?
  3. What do your best-performing franchisees do differently?

Questions to ask current franchisees

  • Was the real cost to open close to the Item 7 estimate?
  • How long did it take to break even?
  • Does the franchisor deliver the support it promised?
  • Knowing what you know now, would you buy again?

Next steps

Read the full FDD during your 14-day review period, and have a franchise attorney review it. Considering Qargo Coffee? Ask us any of these questions.

This article is general information, not legal advice.