Guide
Buying a franchise
What to check, in what order, before you sign anything. Written for people with a franchise agreement in front of them and a deadline attached to it.
Since 2013 · Minerva Law
2,880
Franchise agreements reviewed
584
Lease matters negotiated
162
Disputes resolved at mediation
The sequence
Seven checks, in this order
The order matters. Most franchisees do these in the wrong sequence and discover the expensive problem after they are committed.
01
The business, not the brand
Does this site support the projection?
A strong brand does not make a weak site profitable. Test the projection against the actual location, the actual rent and the actual labour cost, and ask the franchisor for the range of outcomes across comparable sites rather than the average.
02
The disclosure document
What the franchisor must tell you
The Franchising Code requires a disclosure document in a set form, given a set period before you sign or pay. It contains the existing and former franchisee lists, litigation history, supplier arrangements and marketing fund accounts.
- Contact the former franchisees, not just the current ones
- Read the litigation and dispute history
- Check the marketing fund accounts and what they fund
- Confirm the disclosure was given in the required timeframe
03
The territory
What you actually get
Territory clauses often exclude online, delivery and third-party platform sales, which may be the fastest-growing channel. Establish whether the franchisor can open a competing site, or sell into your area through another channel.
04
The money
Fees now and fees forever
Initial fee, ongoing royalty, marketing levy, technology fees, mandatory refurbishment, training and transfer fees. Model the total over the full term, not the first year.
05
The lease
Usually the bigger commitment
The lease term rarely matches the franchise term, and the personal guarantee behind it is commonly the largest single exposure in the transaction. Review the lease alongside the franchise agreement, never separately.
06
The exit
How this ends
Renewal may be a right, an option on conditions, or nothing. End-of-term refurbishment, de-identification and restraint of trade clauses decide what leaving costs you.
07
The advice
Before, not after
Cooling-off runs after signing, by which point you have committed deposits, time and often a lease. A review before signing is the cheaper moment to find the problems.
Download the guide
Buying a franchise
The full guide as a PDF, including the pre-signing checklist and the questions to put to former franchisees.
Common questions
Buying a franchise, answered
How long should I take to decide?
Longer than the franchisor would like. The Code sets minimum disclosure periods precisely because these decisions should not be made under time pressure, and a franchisor pushing hard on a deadline is itself information.
Should I talk to existing franchisees?
Yes, and to former ones. The disclosure document must list both. Current franchisees have an interest in the system looking healthy; former ones do not.
Can I get out during cooling-off?
For most franchise agreements you have 14 days after signing to terminate, and the franchisor must repay certain amounts. You will not usually recover everything you have spent by then, which is the argument for advice before signing.
What does a review cost?
A fixed fee on a defined scope, quoted before work starts. Send the documents and the deadline and you will have the figure before committing.
Also relevant
Related services
Next step
Have the documents in front of you?
Send them over with the deadline and we will tell you where you stand.