A franchise is a long-term operating relationship, not simply a brand license. These seven areas deserve evidence before enthusiasm.
1. The FDD is a starting point
The disclosure document organizes material information into 23 items, but it does not replace verification or professional advice.
2. Revenue is not profit
When Item 19 includes sales figures, build your own cash-flow model with labor, occupancy, debt service, royalties, local marketing, taxes, and owner compensation.
3. The franchisor’s financial condition matters
Review Item 21 financial statements with an accountant. A growing system still needs the resources to support operators.
4. Current and former franchisees are essential sources
Use Item 20 contacts to ask consistent questions and compare patterns rather than relying on one enthusiastic reference.
5. Standardization limits autonomy
Required products, vendors, hours, systems, promotions, and remodels may reduce local flexibility.
6. The day-to-day job must fit
Evaluate staffing, sales, customer service, compliance, weekend work, and stress—not only the product category.
7. Plan the exit before entry
Understand transfer rules, renewal conditions, guarantees, lease exposure, and post-term restrictions before committing capital.
Primary references: FTC Consumer Guide and U.S. Small Business Administration franchise guidance.