How to Check ‘Low-Cost, Easy Start-Up’ Claims Before Joining a Franchise in Japan

Phrases such as ‘low start-up costs’ and ‘easy to start with no experience’ in franchise recruitment adverts may spark your interest in a brand, but they will not necessarily reflect the conditions under which you can open your own business. Before joining a franchise network, the aim is not to distrust every advert, but to establish the conditions that make its appealing claims true. This article explains how to check recruitment advertising and turn it into useful information for your decision.

1. Turn advertising claims into conditions you can check

First, save any advert that interests you, together with its publication date, where it appeared and the name of the company recruiting franchisees. If the wording differs between a franchise listing website, information session materials and the franchisor’s recruitment page, keep each version. If an intermediary published the advert, also ask whether the franchisor has checked its contents.

Next, turn the promotional claims into specific questions. For example:

Recruitment advertising claim	What to ask the franchisor
Start your business at low cost	Which costs are included in the advertised amount, and which are excluded?
No experience needed	Are any qualifications, skills or staffing requirements necessary before opening?
No shop premises required	Are there conditions on working from home, or requirements for workspace and storage?
The owner only needs to manage the business	Who handles day-to-day operations, and who covers staff shortages?
Full support with every aspect of setting up	Which tasks does the support cover, and which must the prospective franchisee handle?

‘People without experience can apply’ is not the same as ‘people without experience can run the business with little preparation’. Likewise, ‘no shop premises required’ does not necessarily mean there will be no premises-related costs. Do not build your business plan on vague wording.

2. Compare ‘low-cost’ claims using the same cost categories and timeframes

When comparing brands, simply placing their advertised figures side by side will not give you an accurate picture. One figure may cover only the initial franchise fee, while another may include equipment and training.

Ask the franchisor for documentation showing the breakdown of the advertised amount, its tax treatment, the conditions that apply and when payments are due. Then divide the expenditure required for your own launch into three categories:

• Expenditure between signing the contract and opening: franchise-related fees, equipment, supplies and preparations for licences and permits.
• Expenditure after opening until income stabilises: rent, staff costs, stock purchases, communications costs and similar expenses.
• Additional expenditure if you do not meet the advertised conditions: for example, buying equipment if your existing equipment cannot be used, or costs incurred outside the areas covered by the offer.

These are items to check against each individual offer, not costs that arise with every brand. Include any expenditure essential to opening in your comparison, even if it is payable to someone other than the franchisor.

Pay particular attention to the difference between ‘no cost’ and ‘no upfront payment’. Instalment payments or leasing may reduce the cash needed at the outset, but future payment obligations remain. Check whether ‘low start-up costs’ means a low total cost or merely a low initial cash requirement.

Set aside money for living expenses separately from business funds. Having enough to cover the advertised start-up amount does not necessarily mean you can also support yourself after opening.

3. Understand Japan’s legal framework for recruitment advertising

In Japan, Article 11 of the Act on the Promotion of Small and Medium-sized Retail Business requires franchisors within its scope to provide written disclosure and explanations before a contract is signed. It applies to arrangements classed as ‘specified chain businesses’ under the Act. This classification depends on criteria such as having mainly small and medium-sized retailers as members, ongoing supply of goods or arrangements for their supply, management guidance, use of trade marks and collection of money when joining. An arrangement is not automatically covered simply because it is called a franchise.

By contrast, the Japan Fair Trade Commission’s Guidelines Concerning the Franchise System under the Antimonopoly Act cover franchise chains in all sectors, not just retail and food service. Franchisors and franchisees are independent businesses, and their trading relationship is subject to the Antimonopoly Act.

If recruitment practices misleadingly portray an arrangement as substantially better or more advantageous than it actually is, and thereby unfairly entice competitors’ customers, they may constitute the unfair trade practice known as ‘deceptive customer inducement’. Failure to disclose important conditions can also be problematic if it creates such a misleading impression.

However, emphatic advertising language or an explanation that seems incomplete does not, by itself, establish a breach. Each case requires assessment of the overall presentation, the actual trading terms and the nature of the misleading impression. Also distinguish between statutory disclosure duties and information that the guidelines recommend disclosing.

Do not assume that a problem with an advert automatically makes the contract invalid. Contract validity and compensation also require consideration under civil law, so seek advice from a lawyer before signing if you have serious concerns.

4. Compare the advert, explanations and contract, and defer your decision while discrepancies remain

To complete your checks, create a single table with columns for ‘advertising claim’, ‘franchisor’s explanation’, ‘supporting documents’, ‘conditions applicable to me’ and ‘unresolved points’. The purpose is not merely to record whether you received an answer, but to show how that answer changed your initial understanding.

For example, suppose an advert promises ‘full support with every aspect of setting up’, but the explanation reveals that support extends only to advice on selecting premises, while site inspections and applications for licences and permits are the franchisee’s responsibility. Rather than simply marking the point as explained, update your plan to reflect the tasks you must undertake, any external professionals needed, additional costs and preparation time.

You are more likely to obtain specific answers if you approach the franchisor in this order:

1. Show the advert you saved and identify the wording you want to check.
2. Ask about the conditions and exceptions attached to that claim.
3. Confirm whether it applies to your intended location, operating model and financial circumstances.
4. Ask where this can be verified in the contract or itemised cost breakdown.
5. If there is a discrepancy, request corrected documents or a response explaining the reason.

Answers such as ‘we will explain the details after you sign’ or ‘it is usually fine’ leave important conditions unverified. Conversely, a franchisor’s willingness to explain the limits of its advertising and the circumstances in which an offer does not apply can help you compare options. A difference from the advert need not mean immediately ruling out the franchise; reassess whether the business is viable under the actual terms.

Key practical steps: save adverts, turn appealing claims into specific questions, and incorporate the answers into your cost and task planning. Until important discrepancies have been resolved, do not commit to a franchise solely on the impression created by its advertising. This is the foundation for joining a franchise network with confidence in your decision.