Franchising isn’t for everyone.
But if you’re serious about it, there are some things you need to know. For purposes of this blog post, eleven to be exact. These aren’t just suggestions; they are essential truths that can make or break your success as a franchisee.
1. Strong Brand or Great System—Preferably Both
A franchise is only as strong as its brand or its system. Ideally, you want both. If you are considering a brand no one has heard of, it better have a system that blows you away because you will be building it from the ground up like an independent business. Without a well-known brand or a proven system, ask yourself: what are you really buying?
2. Be Ready to Walk Away
The best deals are made by those who are willing to walk. When you’re prepared to step back, you hold the cards. Franchisors know this, and they are more likely to offer concessions—lower fees, better territorial protections, more favorable terms. It’s like negotiating for a car; if they think you’re about to leave, they’ll stop you with a better offer. Without a doubt, the clients I have represented who were willing to walk away consistently secured the best deals. Every time.
3. Get It in Writing
I wrote an entire blog post on this topic but verbal promises mean nothing. If the franchisor tells you something, make sure it’s either already in the franchise agreement, or written in an addendum prior to you signing. If it’s not in writing, it’s not happening. Period. You can take that to the bank.
4. Trademark Indemnification Is Non-Negotiable
Why would you invest your life savings into a brand that won’t even defend its own trademark? A franchisor should be legally required to stand by their brand, including defending you if someone sues over the use of their trademark. It seems like this goes without saying, but unfortunately many franchisors will not agree to this. If it’s not addressed in the franchise agreement, be cautious.
5. Know Yourself
Franchising isn’t for the rebellious or really even the independent type. If you are someone who likes to chart your own course, a franchise may not be the right fit. Franchising requires following a set system. If that doesn’t sound like you, don’t force it.
6. Talk to Current and Former Franchisees
Don’t skip this step. Interview as many current and former franchisees as you can. Their insights are invaluable and could save you from making a costly mistake. If you don’t do your homework, you’ve only got yourself to blame if things go south.
7. Protect Your Spouse
Personal guarantees are common, but there’s no reason your spouse should be on the hook too if they aren’t involved in the business. Keep your family’s financial exposure as limited as possible. Insist on excluding your spouse from any personal guarantees. (See #2 above if a franchisor is unreasonable about it).
8. Bargain with New Franchisors
Getting in on the ground floor of a new franchise can be enticing, but it’s also risky. New franchisors need franchisees to grow, which means you have leverage. Use it. Negotiate for better terms, lower fees, or additional support. Don’t be shy about asking for more.
9. Franchise Agreements Are Negotiable
No matter what a franchisor says, franchise agreements are negotiable. If they are not willing to budge, consider whether its the right franchise for you. A good franchisor will respect your need to protect your investment. It’s just business, after all.
10. Multi-Unit Franchising: High Risk, High Reward
Owning multiple units is where the real potential lies. The most successful franchisees I’ve seen are all multi-unit owners. But it’s not for the faint of heart or the undercapitalized—it requires significant capital and commitment. Do not consider immediately it unless you’re ready to scale and have the resources to do it.
11. Franchises Fail Too
Franchises are not a sure thing. In fact, they fail at roughly the same rate as independent businesses. Don’t fall for the myth that a franchise is a guaranteed success. It’s not. Do your due diligence, and do not trust your investment to luck.
Final Thoughts
Franchising can be a powerful way to build wealth and grow a business, but it’s not without its challenges. If you are considering a franchise, keep these 11 truths in mind. They are not just tips—they are the keys to making a smart, informed decision that sets you up for success.