Making Your Decision: The Franchise Checklist (Step 18 of 18)
After returning from Discovery Day you will reflect on whether you want to sign the Franchise Agreement or not. This checklist is merely a guide for your thought process, if you can answer all these questions with confidence then you are in a position where you did enough research to make a decision. Ultimately, you have goals for your life and the franchise needs to fulfill those goals. Regardless if you want one location as a side project or you want to build a 50 unit empire, these questions apply to you the same. However, only you know your goals and those need to be the final test if you should proceed with the franchise investment or not.
If you have completed full due diligence, can answer every question below, and the franchise will help you meet your long term goals- it should be a yes! If it doesn't, then it should be a no.
If it's a yes, you will sign the documents, wire the initial franchise fee, and put in your final application for a business loan (if that's how you're funding the business). You will start looking for a location (if you have a brick and mortar franchise), ordering materials, and you will attend the next training session.
This is an exciting period filled with the unknown. It will be scary, fun, exciting, terrifying, and everything in between! These feelings are normal and bouncing from high highs to low lows will become a day to day experience for you as a business owner. Good luck!
1. Personal Readiness
Have I involved my spouse/partner/family in this decision?
Am I mentally and emotionally ready to run this business full-time?
Do I have a realistic plan for the first 12 months, including cash flow gaps and lifestyle changes?
Am I prepared for uncertainty, especially during the ramp-up period?
Do I want to do the actual day-to-day work this franchise requires?
2. Financial Preparedness
Do I have enough capital for startup + working capital + personal runway?
Have I seen real P&Ls from multiple franchisees and modeled a conservative, realistic projection?
Do I have a plan for covering personal expenses until the business is self-sufficient, to include a salary for myself?
3. Franchise Unit Economics
Do I understand and believe the business model?
Have I stress-tested my breakeven point and cash flow under multiple scenarios?
Have I compared my projections to Item 19 and franchisee data?
Do the margins make scaling realistic?
Can I make what I want in the time frame I want?
Is the middle of the pack owner doing this?
Can I reach my goals without working more hours than I’m willing to commit?
Have I seen real schedules from average-performing owners?
4. Franchisor Quality
Have I evaluated the franchisor’s leadership, culture, and support systems?
Are they transparent, responsive, and supportive?
Are there any red flags in the FDD or litigation history?
Is the training good enough to get me from where I am now to in business?
Is the support good enough to answer all my needs quickly?
Is this franchise proven to acquire customers?
Is this franchise proven to be able to hire employees?
Is the franchisor still innovating and improving their systems?
5. Franchisee Validation
Did I talk to both top and bottom performers?
Did I ask tough questions and get honest answers?
Would I want to be part of this franchisee community long-term?
Do franchisees generally say they’d do it again?
6. Market Fit
Have I done local market research (demographics, competition, demand)?
Is the market big enough in my area to hit my goals?
Have I tested interest in my area (e.g. calling leads, running ads, mystery shopping competitors)?
Do I have a territory advantage or headwinds?
Is it in a large industry that is growing faster than competition is entering?
7. Personal Fit With the Business
Am I comfortable doing the core activities (sales, hiring, ops)?
Does this business align with my strengths, values, and goals?
Would I be energized or drained by what success actually requires here?
Do I like the operational team and can see myself working with them for the next 10 years?
8. Support Systems in Place
Have I reviewed my model with a CPA?
Do they believe I’m financially prepared for this risk?
Does a lawyer think the franchise agreement is drafted fairly?
Do I have a clear onboarding and launch plan?
9. Exit Potential
Is this business building real equity or just cash flow? Am I ok with whatever it is?
What is my exit plan and has others done this?
If my plan is to sell, are there buyers for this franchise?
If my plan is to put a manager in place, can one unit financially support a manager and pay me what I want? If not, how many units do I need to get to? Have other owners gotten to this point yet?
If I want to sell for a big exit, how many units would that require and are there owners who own that many units right now?
10. Final Gut Check
Do I feel calm, clear, and confident—not desperate or rushed?
Does it line up with my skills?
If a good friend was making this choice, would I advise them to go forward?
If this fails, would I still be proud of how I made the decision?
That is really it. Everything else is getting to an answer on these questions and ensuring the majority of franchisees I speak with all are saying the same thing.
Leap already
Once you have these questions answered, it is time to leap. Just like when you are dating someone and trying to decide if you should marry them or move on, at some point you have to say this one is mine and move forward. You can’t date forever because either you will lose interest or your interest will move on to someone who will commit.
You started this process because you want own a business. The business you have found checks all your boxes. It is time to leap.
