Questions to Ask Before Buying an Existing Franchise

The right questions can protect a franchise resale buyer from surprises. A listing may show an asking price and reported cash flow, but those numbers do not explain the owner’s role, lease obligations, staff issues, required upgrades, or whether the franchisor will approve the transfer.

Questions about the seller and reason for selling

Ask why the owner is selling, how long the business has been operating, whether the seller owns other locations, whether the business is currently open, and what transition support the seller is willing to provide. A normal retirement or relocation sale can look very different from a sale driven by declining performance or unresolved operational problems.

Questions about revenue and cash flow

Ask how revenue has changed over the past three years, whether cash flow is seller discretionary earnings or another measure, what add-backs are included, and whether financial statements can be supported by tax returns, bank statements, POS reports, or royalty reports.

Questions about the owner role

Ask how many hours the owner works, what tasks the owner performs, whether a manager is in place, how many employees are needed, and what would change if the buyer is absentee, semi-absentee, or owner-operated. See Buying an Existing Franchise Location: Pros, Cons, and Common Risks.

Questions about the franchisor

Ask whether the seller is in good standing, whether transfer approval is required, what training is required, whether the buyer must sign a new franchise agreement, and what transfer fees or upgrade requirements apply. Also review Franchisor Approval When Buying a Franchise Resale.

Questions about the lease and assets

Ask when the lease expires, whether assignment is allowed, whether landlord consent is required, what equipment is included, what assets are leased, and whether any equipment needs replacement.

Questions before making an offer

Ask what information will be available during due diligence, whether the seller will accept contingencies, whether seller financing is possible, and how confidentiality will be handled.

This article is general educational content for franchise resale buyers and sellers. It is not legal, tax, valuation, lending, or financial advice. Buyers and sellers should verify all information independently and consult qualified advisors before making decisions.