14 Questions to Ask Before Buying a Franchise

If you’ve been dreaming about owning a business, but the thought of building everything from the ground up makes you feel tired, franchising might be the perfect fit for you. The right franchise will offer the support of a proven system and expert guidance, helping you avoid common pitfalls and get your business off the ground faster than you thought possible.  

At the same time, it’s important to note that not all franchise opportunities are created equal. Each franchise presents a different opportunity. Aligning your interests and expectations with the right franchise is crucial for long-term satisfaction and success. That is why asking the right questions is the key to making a smart, informed business investment. 

Whether you're wondering how to open a franchise or are still deciding what franchise you should buy, this guide is for you! Below, we list 14 must-ask questions to help you choose the right brand for your goals. At Neighborly®, we’ve helped hundreds of franchise owners succeed, and we’re here to help you make the best decision for your future. 

1. What are the initial franchise fees, and what do they cover? 

Every franchise business will have a startup cost, which includes an initial franchise fee. These costs typically help the franchisor cover operational costs, including managing call centers, marketing programs, and other programs to keep your business running efficiently. 

Before you sign on to any franchise business, be sure to research all fees and costs carefully and understand what is included (and what isn’t). This information will be readily available and transparent in the Franchise Disclosure Document (FDD) and can often be found in other franchisor marketing material. For example, you can explore Neighborly franchise cost breakdowns on our Investments page. 

2. What ongoing costs will I be responsible for? 

Part of long-term franchise ownership is paying ongoing royalties and fees. These costs cover a range of materials and services, such as marketing or proprietary technology systems. For example, Neighborly invests those fees into quality national marketing efforts, the latest in technology platforms, and continued business coaching. This is the kind of comprehensive support that solo business owners often go without. 

3. What kind of training and onboarding support is provided? 

One of the biggest benefits of buying a franchise business is that you don’t have to go it alone. From day one, a quality franchisor will give you access to comprehensive, step-by-step training and other support systems. At Neighborly, we guide you through every phase - from opening your business to scaling up - with expert coaches and a peer network of franchise owners. Learn more on our Franchising 101 page. 

However, it’s important to understand that not every franchisor is made equal, and the training and support systems may vary depending on the franchisor. It’s important to do your research before making a decision. 

4. Will I receive marketing and lead generation support? 

Although absolutely critical, marketing is one area of business ownership often overlooked (or bungled) by new business owners. This is unfortunate because marketing a business is not optional and can literally make or break your success. Instead of trying to figure it out all on your own, when you own a Neighborly franchise, you receive a comprehensive marketing playbook, lead-gen tools, and national brand awareness campaigns that bring customers right to you. Neighborly’s team of experts can provide custom marketing support specific to your market, taking the guesswork out of the equation. 

5. What is the brand’s reputation with customers and franchise owners? 

Along with marketing, brand reputation is a big part of thriving as a business. Most startups don’t have the kind of brand recognition that you get with a franchise, which is another big advantage for franchise business owners. Still, all franchise opportunities are different. For that reason, be sure to research the brand’s public reputation and talk to existing franchise owners before you commit to one. It’s also a good idea to look up online reviews, customer satisfaction scores, and legal actions. Resources like the International Franchise Association and the Federal Trade Commission (FTC) can also offer helpful insight. 

6. How resilient is this industry, and how is this brand positioned? 

Another question you definitely should ask: Is this a business that can weather economic shifts? In years past, volatile economic conditions have wreaked havoc on small businesses. But some industries tend to fare better than others. For example, Neighborly brands operate in the home services industry, which is historically resilient, even in challenging economies. Check out our article on The Resilience of the Home Service Industry to see the data. 

7. What does the Franchise Disclosure Document (FDD) reveal about earning potential? 

The Franchise Disclosure Document is a legal document that franchisors must provide to potential franchise owners before selling a franchise. It contains detailed information about the franchise opportunity, including financial performance. Before committing to any franchise, be sure to review this document carefully. It’s also a good idea to consider working with a franchise attorney or CPA to help interpret the numbers and compare your options. 

You can utilize online tools like this one to help you conduct your FDD research. 

8. What will it take to reach breakeven and profitability? 

For most small businesses, the average break-even point is between 6 and 18 months. That is an average, which means it varies widely by industry. A good franchisor will be able to provide you with more specific information about your breakeven and profitability, so be sure to ask lots of questions.  

For example, ask “what would the monthly operating expense be for your business?” and “how long does it take most franchise owners to turn a profit?” You’ll need to know the answers to these and other key questions in order to make an informed decision. To increase your chances of success, you should also have the chance to learn from high performers and build your own successful leadership style. 

9. Will I get a designated territory, and how is it determined? 

When it comes to buying a franchise, dedicated territories matter. This helps to maximize your chances of success. You’ll want to ensure your business won’t be competing with other franchise owners of the same brand in your own backyard. When you become a franchisor owner with Neighborly, you will receive a designated territory for your brand. This is one of the ways we set up our franchise owners for success. 

Figuring out which territories are available and how that process works is another key element to ask your franchisor lots of questions about. For insight into opportunities at Neighborly, use our Territory Finder to explore protected markets and available locations across the U.S. Again, not every franchisor is the same, so ensure you do your due diligence when researching. 

10. Do I need hands-on experience to become a franchise owner? 

No, you do not need trade experience to become a franchise owner in the home services industry. In fact, many of the current Neighborly franchise owners come from backgrounds not related to the field they are in now. What’s most important is that the franchise owner understands the landscape, can work with customers, and has some business acumen. Check out 6 Business Leadership Skills of a Really Great Franchise Candidate for more insight. 

11. Can I buy an existing franchise location instead of starting from scratch? 

Instead of starting up a franchise in a new territory, consider asking if there are any existing locations available for purchase. Many times, the answer to that question is yes! Buying a resale franchise business location can often come with existing customers and more rapid revenue growth.  

It’s important to understand that there could be many reasons why a franchise is for sale; it shouldn’t always be assumed that the franchise isn’t doing well. For example, the current owner could be retiring or dealing with a personal matter. 

However, still be sure to inquire about any issues or problems with the existing business, and why it’s available.  

12. How does the franchisor communicate with and support franchise owners? 

In the world of franchise businesses, strong franchisor relationships are everything. A big part of this relationship should be frequent and effective communication. For example, does the franchisor host regular calls, conferences, or peer groups for franchise owners? Are these calls or meetings positive and productive? This would be a great question to ask other franchise business owners as well, as they would be more likely to give you a unique perspective. A quality franchisor like Neighborly offers ongoing training, field support, and a franchisee-first culture that keeps you plugged in and empowered. 

13. What do current franchise owners say about the brand? 

If it isn’t readily offered, be sure to ask for a list of current franchise owners to speak with directly. It’s your chance to hear real experiences, challenges, and wins. In addition to asking about communication and support, make a list of other questions you are curious about and that would help you gain insight into the realities of owning the franchise business. Talking to current owners is a key part of franchise validation. Listen to the video below to hear from various franchise owners on why they chose Neighborly to support them on their entrepreneurial journey!  

14. Does this franchise align with my lifestyle, goals, and leadership style? 

Ultimately, franchise business success is about the right fit. And finding that fit comes after asking as many questions as you can, questions for yourself as well as for your franchisor. For example, ask yourself: “Do you want a hands-on business? Passive income? Something scalable?” Understanding your personal goals and aspirations can help guide you in making the right choice for your unique situation. Business ownership takes hard work and dedication, so be realistic about what you are willing to put into it. 

For more assistance, check out our Guide to Personal and Professional Freedom, which can help you align your personal and professional goals with the right opportunity. 

Final Thoughts: Take the Time to Ask, Research, and Reflect 

So, is franchising a good investment? It can be if you ask the right questions and choose a brand and franchisor that aligns with your goals. 

At Neighborly, we’re proud to help aspiring franchise owners succeed with our unique combination of brand reputation, comprehensive training, and ongoing support. Want to see if franchise ownership is right for you? 

Download our Neighborly Franchise Ownership Guide or Schedule a Consultation to talk with an expert today!