Buying a Franchise in Australia: Questions for Franchisees

A franchise presentation shows you what a brand promises. Conversations with current and former franchisees help you test what happens in practice. Before joining Australia’s franchising community, use these interviews to investigate one essential question: does the everyday experience match the business you are being offered? A structured approach will produce better evidence than simply asking whether someone recommends the brand.

1. Build a balanced interview list

The Australian Competition and Consumer Commission (ACCC) recommends speaking to at least five current and five former franchisees. Treat this as a research target, not a guarantee that you have heard every relevant perspective. If the network is too small, speak to as many as possible and recognise the limits of your sample.

Start with the franchisee information in the disclosure document rather than relying solely on introductions arranged by the franchisor. Include people with different experiences:

• A recent starter who remembers the opening process and initial costs.
• An established operator who has experienced several trading cycles.
• Someone in a location or territory comparable to yours.
• An operator who has renewed, refurbished or tried to sell.
• Former franchisees who left for different reasons.

Ask for a private conversation at a convenient time. Explain that you are considering buying and want to understand the practical realities. Do not record calls without permission, and respect anyone who declines to share confidential information.

Record each person’s operating period, location type and role. Results from a mature owner-operated business may not translate to a new outlet run by a paid manager.

2. Ask questions that reveal the working economics

Use the same core questions in every interview so you can compare answers. Ask for examples, timing and context rather than broad judgements.

Opening costs and cash reserves

Ask: “Which costs were higher than you expected?” Explore fit-out changes, equipment, recruitment, training travel, opening stock and delays. Then ask how long the business needed additional cash support and what caused the pressure. Someone may decline to disclose figures but still identify missing budget items.

Owner workload and earnings

Ask how many hours the owner works, what duties they perform and whether reported profit includes a commercial wage for that work. Clarify whether any earnings figures discussed are before interest, tax, depreciation or owner remuneration. Turnover alone tells you little about the money available to pay yourself and service borrowing.

Ongoing charges and purchasing

Ask which recurring expenses are hardest to control. Cover royalties, marketing contributions, software, delivery platforms, freight and required suppliers where relevant. Find out whether promotions have increased sales without generating enough additional margin.

Support in difficult periods

Replace “Is the support good?” with “What happened the last time you needed urgent help?” Ask about response times, practical assistance, staff training and local marketing. Specific experiences reveal more than satisfaction scores.

Avoid treating another franchisee’s financial results as a forecast for your proposed business. Give your accountant the underlying assumptions and investigate differences in rent, wages, demand and competition.

3. Ask former franchisees about the exit

A former franchisee’s experience can reveal obligations that are easy to overlook when buying. Start neutrally: “What led you to leave, and how did the process work?” Do not assume every departure means the business failed.

Ask whether they sold, reached the end of their agreement or left early. Explore how long an attempted sale took, what approvals were needed and which costs arose. Did refurbishment requirements, transfer charges or lease obligations affect the outcome?

Useful follow-up questions include:

• What happened to equipment, stock and any personal guarantees?
• Were there disagreements about the condition of the premises?
• Were there restrictions affecting what you could do afterwards?
• What would you investigate differently before buying again?

Distinguish dissatisfaction with a particular event from a recurring network problem. Equally, do not dismiss criticism simply because someone has left. Where accounts conflict, seek corroboration and ask the franchisor for a written explanation without unnecessarily identifying your interviewee.

4. Match the answers to disclosure and contract terms

Australia’s Franchising Code of Conduct is a mandatory code under the Competition and Consumer Act 2010. A new Code commenced on 1 April 2025, with some requirements applying from 1 November 2025. It regulates disclosure and aspects of franchise agreements; Australian Consumer Law also prohibits misleading or deceptive conduct. Have an independent franchise lawyer confirm the rules applicable to your proposed transaction.

Interviews supplement these protections; they do not replace document review. Create a simple evidence table with four columns: issue, interview evidence, relevant document provision and outstanding question.

For example, repeated reports of unexpected equipment replacement should prompt a review of disclosed capital expenditure and contractual upgrade obligations. Reports of poor resale outcomes should trigger questions about transfer approval, fees and remaining agreement and lease terms.

Send unresolved questions to the franchisor in writing. Ask your lawyer whether important assurances should be reflected in the agreement, and ask your accountant to revise the cash-flow forecast where interviews expose omitted costs.

Practical takeaway: Before committing, turn franchisee conversations into a written list of verified facts, unresolved risks and questions for your advisers. Consistent evidence matters more than either a glowing recommendation or a single alarming story.