Buying a franchise is exciting. You picture being your own boss, building something local, and finally working on your terms. That excitement can also blind people to red flags.
This article is for anyone in the franchise discovery phase. If you are talking to brokers, founders, or franchise sales managers and trying to work out what is real and what is sales talk, this is for you.
I am a franchisor myself and the founder of a kids basketball franchise. I sell franchises for a living. That also means I know exactly where people get caught out when they do not do proper due diligence.
This article is based on a recent live breakdown by Little Boomers Basketball founder, Emile Koorey.
Watch the Full Breakdown
Speak to At Least Five Franchisees
This is the most important step and the one people rush or skip.
When you talk to a franchisor or broker, they are paid when you buy. That does not make them dishonest, but it does mean you must validate what you are told.
You should personally speak to at least five existing franchisees.
Your goal is simple. Check if what you are hearing matches reality.
Ask questions like:
What surprised you after joining?
What was harder than you expected?
Would you buy the franchise again if you had the choice?
If the answers line up with what the franchisor promised, that is a good sign.
If franchisees tell a very different story about support, marketing, or communication, that is a red flag.
If you are not allowed to speak to franchisees at all, stop immediately. That is not normal.
Review the Franchise Disclosure Document Properly
The franchise disclosure document is not optional reading. It is the most important document in the entire franchise agreement.
This document lists every fee the franchisor is allowed to charge you during the life of the franchise.
That includes:
Ongoing fees
Marketing fees
Extra charges that may not come up in early conversations
You should review this document carefully with a franchise solicitor.
If you skip this step, you risk being shocked later by invoices you did not expect. That is not bad luck. That is poor preparation.
A common example is a quarterly marketing fee that was never mentioned verbally but is clearly listed in the disclosure document. Once you sign, those fees are enforceable.
This is also why understanding fees like royalties matters. If you have not already, it is worth reading our breakdown of royalty fees and how they work in practice:
Check for Litigation and Disputes
No franchise network is perfect. Some level of dispute is normal.
What you are looking for is patterns.
Every franchisor must publicly disclose:
Current disputes
Litigation
Breach notices
This information is available through the franchise disclosure registry and is updated regularly.
You should ask:
Are the same issues coming up repeatedly?
Are disputes mostly about fees, support, or performance?
Do franchisees feel heard when problems arise?
A small number of disputes can be healthy. A recurring theme usually is not.
Franchise Resales and Churn Explained
A common question people ask is whether franchisees are selling their businesses and why.
Some turnover in a franchise network is normal.
People sell because:
Life circumstances change
Goals shift
They move locations
They want to do something different
What is not normal is a large number of franchisees selling at the same time.
If you see heavy churn in a short period, you need to investigate further. It could point to a broken model or unmet promises.
Do not look for a franchise where nobody has ever sold. Look for one where exits make sense and are explained openly.
Common Mistakes People Make
Trusting sales conversations without validating with franchisees
Skimming the disclosure document instead of reviewing it properly
Assuming no disputes means a perfect system
Letting excitement override due diligence
Rushing to sign without asking hard questions
Key Takeaways
Always speak to at least five franchisees
Validate claims with real experiences
Review the franchise disclosure document with a solicitor
Understand all fees before you sign
Check litigation and dispute patterns
Healthy churn is normal, abnormal churn is not
Buying a franchise is a big decision. Slow down, ask better questions, and protect yourself.
Want to explore whether owning a Little Boomers Basketball franchise could be the right fit for you?
Download the Franchise Success Blueprint here.
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