Investing in a franchise is a significant business decision. Before signing a franchise agreement or committing capital, prospective owners need to understand the business model, investment requirements, franchisor support, local market, and responsibilities that come with ownership.
For first-time franchise buyers, asking the right questions can be just as important as comparing franchise brands. A polished presentation or recognizable brand can create a positive first impression, but thorough due diligence requires looking beyond the marketing.
So, what questions should you ask before investing in a franchise?
Start by asking questions about the franchise itself, the total investment, the franchise agreement, the market, the operating model, and whether the opportunity actually fits your goals.
Questions to Ask Before Investing in a Franchise
| Question | Why It Matters |
| What is the total investment? | Helps you understand the financial commitment beyond the initial franchise fee |
| What does the FDD tell me? | Provides important information about the franchise relationship |
| What fees will I pay? | Helps you understand ongoing financial obligations |
| What training will I receive? | Shows how the franchisor prepares owners to operate the business |
| What ongoing support is provided? | Helps you evaluate the resources available after opening |
| What are my operational responsibilities? | Clarifies what you will actually be responsible for as an owner |
| How does the franchise make money? | Helps you understand the business model and revenue drivers |
| What does the local market look like? | Helps determine whether there is potential demand in your territory |
| What do current Franchise Owners say? | Provides perspectives beyond franchisor marketing |
| What restrictions will I have? | Helps you understand the boundaries of operating within the franchise system |
| What are my exit and renewal options? | Clarifies important parts of the long-term franchise relationship |
| Does this franchise fit my goals? | Helps you determine whether the opportunity is right for you personally |
1. What Is the Total Investment?
The initial franchise fee is only one part of the cost of opening a franchise.
Depending on the business, the total investment may include real estate, construction, equipment, technology, professional services, training, marketing, initial inventory, employee expenses, and working capital.
Ask the franchisor:
- What is the estimated initial investment?
- Which costs are included?
- Which costs are not included?
- How much working capital should I plan for?
- What ongoing expenses should I expect?
- Which costs could change before opening?
The U.S. Small Business Administration’s guidance on calculating startup costs can also help prospective owners understand the types of expenses that businesses may need to account for when planning an investment.
The goal is to understand the full financial commitment, not simply the franchise fee.
2. What Does the Franchise Disclosure Document Tell Me?
The Franchise Disclosure Document (FDD) is one of the most important resources available to a prospective franchise buyer.
The Federal Trade Commission’s Franchise Rule establishes federal disclosure requirements for franchisors and is designed to give prospective franchisees information they can use when evaluating a franchise opportunity.
Ask:
- What does the FDD say about the initial investment?
- What ongoing fees are listed?
- What are the franchisee’s obligations?
- Are there restrictions on suppliers or operations?
- What does the FDD say about litigation or bankruptcy?
- Is a Financial Performance Representation included in Item 19?
- What does the document say about renewal and termination?
Do not treat the FDD as a document to skim at the end of the process.
Read it carefully and consider having qualified legal and financial professionals review it with you.
3. What Fees Will I Pay After Opening?
The initial investment does not tell the entire financial story.
Depending on the franchise system, Franchise Owners may be responsible for royalties, advertising fees, technology fees, supplier costs, renewal fees, or other ongoing expenses.
Ask the franchisor to explain:
- What recurring fees will I pay?
- How are those fees calculated?
- Can they change?
- What services or resources do they cover?
- Are there additional required purchases or expenses?
Understanding recurring costs can help you evaluate the business model more realistically.
4. What Training Will I Receive?
Training can be particularly important for first-time business owners.
Ask what training includes, when it takes place, who participates, and how long it lasts.
Questions might include:
- Is initial training provided?
- Is hands-on or immersion training available?
- Does training cover operations and leadership?
- How are employees trained?
- Is additional training available after opening?
- What happens if I need help with a new operational challenge?
Training should not simply be evaluated by the number of training days. Consider whether the training addresses the actual responsibilities you will have as a Franchise Owner.
At Hounds Town, Franchisee training includes multiple phases covering areas such as dog management, administrative responsibilities, employee hiring and training, facility operations, leadership, and customer service.
For a dog daycare franchise, that operational knowledge can be particularly important because the business involves both animal care and business management.
Prospective owners can also look at the customer-facing side of the model. Hounds Town’s puppy socialization classes provide an example of how canine socialization can be incorporated into a pet care business.
5. What Ongoing Support Does the Franchisor Provide?
Initial training is only one part of the relationship. Ask what happens after the business opens. A franchise system may provide support related to:
- Operations
- Marketing
- Technology
- Site selection
- Real estate
- Facility development
- Business management
- Training
- Local marketing
But support varies between franchise systems. Ask for specific examples rather than accepting a general statement that the franchisor provides “ongoing support.” You can also ask current Franchise Owners whether the support they received matched what they were told during the discovery process.
6. How Does the Franchise Actually Make Money?
Before investing, you should be able to explain the business model in simple terms.
- What products or services generate revenue?
- Which customers are being served?
- Are purchases typically recurring or one-time?
- What factors influence demand?
For a pet care franchise, for example, services such as dog daycare, overnight boarding, grooming, or pet spa services may address recurring needs for pet parents.
Hounds Town also offers overnight dog boarding, which illustrates how a pet care business can provide services beyond daytime daycare.
Understanding those revenue drivers can help prospective owners evaluate whether the business model aligns with their expectations.
7. What Does the Local Market Look Like?
National industry statistics provide context, but franchise owners operate in specific communities. Before investing, research the territory you are considering.
Look at:
- Population
- Household characteristics
- Income levels
- Competitors
- Local businesses
- Consumer demand
- Real estate
- Labor availability
- Demographic trends
The U.S. Census Bureau’s QuickFacts provides demographic and economic information for communities across the United States and can be a useful starting point for researching a potential market.
For a pet care franchise, consider how many households in the market own pets, what competing services already exist, and whether the territory’s demographics align with the franchise’s target customer.
The question is not simply, “Is this a good industry?”
It is: “Is this business model appropriate for this market?”
It can also be useful to understand what consumers actually look for when comparing local pet care businesses. Hounds Town’s guide on how to find the best dog daycare in Denver, CO provides an example of the factors pet parents may consider when evaluating daycare options.
8. What Do Current Franchise Owners Say?
One of the most useful sources of information is often someone already operating within the system. Ask the franchisor for opportunities to speak with current and, where possible, former Franchise Owners.
Ask owners about:
- Their training experience
- Franchisor communication
- Ongoing support
- Marketing
- Operational challenges
- Staffing
- Customer acquisition
- Their relationship with the franchisor
- What they wish they had known before investing
You do not need every franchise owner to have the same experience. Instead, look for patterns.
9. What Restrictions Will I Have?
One of the fundamental differences between an independent business and a franchise is the relationship between autonomy and an established system.
Franchise Owners may need to follow requirements involving:
- Branding
- Suppliers
- Products or services
- Technology
- Marketing
- Facility design
- Operating procedures
- Territory
For some entrepreneurs, those standards provide useful structure. For others, the restrictions may feel limiting. Ask yourself: How much independence do I actually want?
The right answer depends on your goals and preferred way of operating a business.
10. What Are My Renewal and Exit Options?
First-time buyers often focus heavily on opening and overlook what happens later.
Ask about:
- Franchise term length
- Renewal conditions
- Renewal fees
- Transfer requirements
- Sale restrictions
- Termination conditions
- Post-termination obligations
These details can affect your long-term plans. Your attorney can also help you understand the franchise agreement and the obligations associated with renewal, transfer, or exiting the system. While buying a franchise is different from buying an existing independent business, the broader principle is useful: understand what you are committing to before you invest.
11. What Are the Business and Employment Responsibilities?
Owning a franchise means managing more than the customer experience. Depending on the business model, owners may be responsible for hiring, scheduling, payroll, employee policies, workplace safety, and compliance with applicable laws.
Ask:
- How many employees will the business require?
- What roles will I need to hire?
- What employee training is provided?
- What responsibilities remain with me?
- What technology or systems are available to manage employees?
Franchise-specific training can help owners understand the operational side of the business, but Franchise Owners remain responsible for managing their location and complying with applicable requirements.
12. Does This Franchise Fit My Ownership Goals?
This may be the most important question of all. A franchise can look attractive on paper and still be the wrong fit for a particular entrepreneur.
Think about:
- How involved do I want to be?
- Do I want to manage employees?
- Am I comfortable following an established system?
- What financial goals do I have?
- What type of work do I want to do every day?
- Do I want to build a business for myself, my family, or my community?
- Does the industry genuinely interest me?
- Am I prepared for the responsibilities of ownership?
There is no universal definition of the ideal Franchise Owner. The right opportunity depends on the relationship between the business model and the person operating it.
Questions to Ask Before Signing a Franchise Agreement
Once you’ve researched the business and spoken with Franchise Owners, your questions should become more specific. Before signing, make sure you understand:
Financial Responsibilities
What exactly am I required to pay, and when?
Operational Requirements
What standards and procedures will I be required to follow?
Training
What will I learn before opening, and what support will be available afterward?
Territory
What territory am I receiving, and what protections or limitations apply?
Marketing
What marketing resources are provided, and what local marketing responsibilities remain with me?
Renewal and Exit
What happens when the initial franchise term ends, or if I decide to sell the business?
Legal Obligations
What does the franchise agreement require from me?
These questions should be answered before you commit, not after you open.
How Hounds Town Approaches Franchise Ownership
For entrepreneurs considering a pet care franchise, understanding the operating model is particularly important.
Hounds Town USA combines an established franchise system with a proprietary approach to dog management called Houndology™. The philosophy is built around understanding natural canine behavior and supports the brand’s We Let Dogs Be Dogs® approach.
This philosophy is also reflected in Hounds Town’s approach to socialization. Our guide to dog packs, socialization, and friendship provides additional context on the role of social interaction in canine behavior.
The goal is not to suggest that a franchise removes the responsibilities or risks of business ownership. Franchise Owners still need to lead their teams, serve customers, manage their locations, and make decisions within the framework of the franchise system.
Instead, prospective owners can evaluate whether Hounds Town’s systems, training, philosophy, and support align with the type of business they want to build.
What Should You Do Before Investing in a Franchise?
There is no single question that can determine whether a franchise is the right investment. Instead, think of due diligence as a process. Research the market. Review the FDD. Understand the investment. Ask about training and support. Talk with current and former Franchise Owners. Review the franchise agreement with qualified advisors.
And most importantly, evaluate whether the business model fits your goals and expectations. Government resources can provide useful independent information during this process, but they should complement rather than replace franchise-specific due diligence.
The Federal Trade Commission’s business guidance provides information about federal requirements affecting businesses, while the U.S. Small Business Administration offers resources covering business planning, financing, and management.
For entrepreneurs considering Hounds Town, you can learn why entrepreneurs choose Hounds Town and explore the steps to ownership to learn more about the process. Ultimately, the goal is not simply to find a franchise that looks good on paper. It is to ask enough questions to understand whether you can see yourself building the business.
Frequently Asked Questions About Investing in a Franchise
What should I ask before investing in a franchise?
Ask about the total investment, ongoing fees, training, support, operating requirements, territory, local market, franchise agreement, renewal terms, and the experiences of current and former Franchise Owners.
What is the most important document to review before buying a franchise?
The Franchise Disclosure Document (FDD) is one of the most important documents to review. It provides information about the franchise system, investment, fees, obligations, and other aspects of the franchise relationship.
Should I talk to existing franchise owners?
Yes. Speaking with current and former Franchise Owners can provide valuable insight into the actual experience of operating within the franchise system. Ask about training, support, communication, operations, staffing, and challenges.
How do I know if a franchise is a good investment?
No franchise can guarantee business success. Evaluate the business model, total investment, local market, operating requirements, franchisor support, and your own ownership goals before making a decision.
Should I hire a lawyer before buying a franchise?
Prospective franchise buyers should consider working with qualified legal and financial professionals who understand franchising. They can help you review the FDD, franchise agreement, financial obligations, and other important aspects of the opportunity.
What should I look for in a franchise agreement?
Pay attention to fees, territory, operating requirements, supplier restrictions, renewal, termination, transfer provisions, and other obligations. Have qualified legal counsel review the agreement before signing.