Key Considerations When Purchasing a Franchise

For people who are looking to move from a corporate job to business ownership for flexibility, an additional business venture, or to diversify investments, owning a franchise can be life-changing. Even with the recent economic uncertainty, franchise growth exceeded projections in 2024, growing by 2.2%, and franchises are expected to grow an additional 2.4% in 2025, according to the International Franchise Association.

Today, there are many options when it comes to owning a franchise, but investing in one is a commitment and decision not to be taken lightly. What should you consider?

Here are five key areas to assess:

1. Expertise and support of the parent company

Franchise owners tell us they like the systems and support of working with a franchisor over going into business themselves (after “wanting to work for oneself and make more money”) as a leading reason to buy a franchise.

Consider resources the franchisor or parent company offers. These should include: 

• Pre- and post-grand opening support
• Access to technology (CRM systems, management software, phone support, marketing platforms)
• Marketing support across channels, from paid to organic sources to optimized online presence
• Partnerships with procurement providers to help reduce costs and enhance service offerings

Consider the management team. Do they have a strong background in the industry? Are they accessible? Do they offer hands-on training and ongoing, timely support? Are you able to speak with them directly, as needed?

What training does the franchisor offer, and how frequently does it offer it? Does it provide in-person, in addition to online, training on aspects of the business, from management and leadership to effectively recruit, hire, train, and retain a high-quality team, to certification for skills?

Does franchisor management attempt to get to know you and introduce you to their brand? Do they provide guidance on financing, enable you to meet their team, and other franchise owners?

What types of documentation on daily business operations, sales, management, and marketing do they offer? Do they seek to make sure you understand requirements and processes?

2. Established business model

Consider the reputation and track record of the franchise brand and parent company. Are they well-known, respected, growing, and trusted by customers? What level, and how many years of experience, does management of the franchisor have to guide franchisees through ebbs and flows of the economy over time and on a day-to-day basis?

When it comes to the competition, does the franchise offer a unique offering? Is the industry sector expanding or declining? What is the market overall and in your territory?

3. Growth and recession-resistance

Examine customer perception of the services the franchise offers. Are the services considered “essential” or “discretionary,” likely to be cut in uncertain times?

Consider the franchisor’s past track record and long-term growth strategy. Is the brand in a high-growth or more mature lifecycle plateauing in demand? How have the franchisor and franchisees performed over time, in a recession or pandemic? How are they performing now? Is the brand adaptable, growing?

Consider potential for recurring revenue streams and “client stickiness.” Are customers likely to purchase again? What are repeat purchase averages? Is there potential to offer subscription-based models to incentivize repeat purchases?

How do overhead costs compare? Are they high, as with brick and mortar, or lower, with mobile options?

Some franchisors may also be able to offer franchise owners access to their other brands/franchises to grow presence in their territory or partner with for cross promotion.

4. Investment and fees 

Examine fees and costs, including the initial franchise fee, territory fees, and total initial investment, as well as ongoing costs and royalty fees. Assess terms, renewal requirements, and restrictions. Review franchisor recommendations on available liquid capital and minimum net worth.

Examine the Franchise Disclosure Document. Fees must be disclosed in this contract. Ask about fees and expected contributions early and throughout due diligence, and potential for increases, to ensure transparency.

5. Fit and culture

Perhaps most importantly, consider if you can see yourself owning the franchise and being a part of the system. Talk with other franchise owners, connect with them at the franchisor’s annual conferences or events, see them in action in their markets, and use their services and products. Research franchisee and customer-based rankings and reviews.

How does franchisor management make you feel? Is the culture open and supportive? Do they get back to you promptly? Welcome feedback? Are they innovative? Graceful in helping through indecision and challenges? Are current franchise owners collaborative and helpful, or more competitive?

The process of deciding to purchase a franchise can span months to a year or longer. While it should not be taken lightly, for some, becoming a franchisee can be one of the best career decisions, giving them greater flexibility, financial growth potential, and fulfillment. Can you see yourself owning a franchise? Ask critical questions throughout the process.

Amy Addington is founder of Woofie’s, providing pet sitting, dog walking, and mobile pet spa services, with approximately 70 franchises nationwide. She is also a franchise owner of Woofie’s of Del Ray Beach.