The glossy brochures, the polished pitch decks, the “be your own boss” promise — franchising can be appealing, but beneath the surface lies a business model that demands diligence. The ACCC recently released a practical set of questions for anyone considering buying a franchise, and their message is clear: do your homework — thoroughly.

As a commercial lawyer working with franchisors and franchisees alike, I know that asking the right questions early can prevent costly regrets later. So if you’re eyeing a franchise opportunity, here’s a distilled guide to the most important conversations you should be having — not just with the franchisor, but with other franchisees in the network.

Speak to Franchisees — Both Past and Present

The disclosure document must include contact details for current and former franchisees. Use them. Talk to at least five of each. Ask:

Reality Check: What’s it really like day-to-day? How many hours do they work? Would they do it again?

Financial Insights: How long did it take to repay their initial investment? Are they cash-flow positive? Can they draw a wage?

Support: Was training adequate? Does the franchisor respond quickly? Are disputes resolved fairly?

System Strengths and Weaknesses: What are the best and worst aspects of the business? Have there been system-wide changes that affected profitability?

If former franchisees left the system, ask why. Did they make a return on their investment? Would they walk the same path again?

Ask the Franchisor the Tough Questions — In Writing

Getting answers in writing (and running them past your legal (hopefully us!) and financial advisers) is critical. The ACCC suggests digging into:

Business Fundamentals

What’s the initial setup cost, and first-year cashflow forecast?

What happens if the lease and franchise agreement end at different times?

Can I exit early — and what are the penalties?

Financial Viability

What’s the range of revenue across franchisees — high, low, average?

How long does it take to break even?

How many franchisees are behind on fees or rent?

Training and Support

Is training included — and does it cover real-world business operations, not just systems?

What help do I get if things aren’t going to plan?

Marketing

How is the marketing fund managed? Are head office salaries deducted from it?

Do franchisees get a say in marketing strategy?

Am I expected to spend on local marketing — and can I choose how?

Supply Chain Transparency

Are there mandatory suppliers?

Can I source cheaper alternatives?

Does the franchisor receive supplier rebates — and are these disclosed?

Culture and Leadership

How long do franchisees typically stay?

What’s the dispute resolution process?

Who’s running the business — and do they understand franchising?

What This Means for You

Buying a franchise is not buying a business, it a licence to run a business for a prescribed term — it’s entering into a long-term commercial marriage with the franchisor. And like any good relationship, it should be built on transparency, accountability, and mutual benefit.

The Franchising Code of Conduct gives you rights — use them. And before signing anything, make sure your advisers (again, hopefully us!) review the disclosure document, franchise agreement, and financials.

Ask better questions. Make better decisions.

If you’re considering entering a franchise system and want legal guidance on what to look out for — and what to avoid — feel free to get in touch with us at FCW Lawyers.