Anyone assessing a franchise spends almost all their time on the wrong thing.
They look at the brand, the product, the entry fee, and then take the contract to an accountant. That is the wrong moment: by the time you reach the contract you have already decided, and you are only looking for confirmation.
The questions that matter get asked earlier, at the first meeting, and there are few of them.
Which numbers should you ask a franchisor for first?
| Number | What it tells you | How it gets masked |
|---|---|---|
| Openings in the last 24 months | whether the network really grows | "we are in over 40 countries" |
| Closures in the same 24 months | whether the network holds | left unsaid, and they wait |
| Months to payback for the average franchisee | whether the maths works | "it depends a lot on the area" |
The second separates a healthy network from a shop window. Everyone quotes openings, almost nobody quotes closures, and without the ratio the first number means nothing: a network that opens 12 outlets and closes 9 is shrinking, but say only "12 openings" and it sounds like the opposite. Nor is it a cheeky question. In the US, the FTC Franchise Rule makes franchisors disclose outlet numbers for each of the last three fiscal years, including terminations, non-renewals and outlets that ceased operating. In Italy, law 129/2004 requires the year-by-year change in the number of franchisees over the last three years.
Ask for the closures. The answer to that question is worth the whole meeting.
When the franchisor does not have the figure, the figure is not the important part: the fact that they do not collect it is. It means they do not know where their franchisees fail, so they cannot help you avoid it.
The nine questions they must be able to take
- NOIHow many franchisees have you lost and why — the why matters more than the how many
- NOICan I speak to one who closed — the answer to this is usually the answer to everything
- NOIWho brings customers to the outlet, you or me — and on whose budget
- NOIWhat happens if I miss the minimums — it has to be written, not described
- AIWhat the first year actually costs, not the fee: fee, fit-out, stock, rent, staff
- NOIWho sets the prices — if you do, the margin is yours; if they do, it is not
- NOIWhat may I sell beyond your catalogue — a tight exclusive is a risk
- NOIHow do I exit — term, notice, penalties, what stays with you
- NOIWho is my contact and how many sites do they cover — at 40, they cover nobody
You do not need all nine at the first meeting. Three are enough to know who you are dealing with, and they are the second, the fifth and the last.
What does the first year of a franchise really cost?
The entry fee is the line everyone talks about and it is nearly always the smallest.
The number that counts is: fee + fit-out + opening stock + deposit and early rent + staff for the months when you are not yet selling enough. That last line is what causes the trouble, because nobody puts it in the plan and everybody pays it. For scale: the average budget to set up a franchise business in Italy is around €120,000, according to the Assofranchising 2026 report as covered by Il Sole 24 Ore.
To "how long until payback", the acceptable answer is a number with a source attached: the average across outlets opened in the last two years, not the best one and not a projection. Should it come back as "it depends", the conversation is over. Not because it is a lie, but because it means they do not know.
When is it time to walk away?
Hurry. "Someone else is looking at this territory" is the oldest line in the trade. A network that works can wait two weeks; one that needs your fee this month cannot.
No franchisee to talk to. Will they not connect you with anyone, or only with one they picked? You already have your answer. A franchisor confident in their network lets you speak to whoever you like. In the US they have little choice: the disclosure document must list current franchisees with their phone numbers, plus everyone who left in the last fiscal year, and it must reach you 14 calendar days before you sign.
The marketing is entirely yours. Where the franchisor collects royalties while customer generation stays wholly on you, you are buying a sign and a manual. That can still be worth it, but then the price has to be renegotiated for what it actually is.
From the other side of the table
Worth saying, because it is the work we do: a franchisor who answers these nine questions well is not more honest than the others, they are better organised. They collected the data, they know where the network loses people, and they have a system for bringing customers to the outlets instead of pushing that onto franchisees.
How that system gets built is in the franchise development guide; the method we use to alternate machine and people is in the vibe marketing guide.
Frequently asked questions
How do you assess a franchise before opening one?
On three numbers: openings in the last 24 months, closures over the same period, and months to payback for the average franchisee. Everyone quotes openings, almost nobody quotes closures, and without the ratio between them the first number says nothing. Where those figures are missing, the problem is not the sector: it is that they do not collect them.
What does opening a franchise actually cost?
Far more than the entry fee, which is the line everyone talks about and nearly always the smallest. The real total is the fee plus fit-out, opening stock, deposit and early rent, and above all staff for the months when you are not yet selling enough. That last line causes the trouble, because nobody puts it in the plan.
Is a franchise better than starting your own business?
It depends what you get for the royalties. If the franchisor brings customers to the outlet through a system that works, it usually is. Where they collect and leave all customer generation to you, you are buying a sign and a manual: that can be worth it, but the price should reflect what it is.
Can I speak to other franchisees before signing?
You must, and it is the most useful question of all. A franchisor confident in their network will let you speak to whoever you like, including people who closed. Where they will not connect you with anyone, or only with one they chose, you already have the information you were after.
What are the signals to walk away?
Hurry ("someone else is looking at this territory"), refusing to let you speak to other franchisees, and having no figure for closures. A network that works can wait two weeks and has nothing to hide about the outlets that did not make it.
Who sets retail prices in a franchise?
It varies by contract, and it needs clearing up before signing because it determines your margin. Set them yourself and the margin is a lever you control; when the franchisor sets them, your P&L depends on decisions you do not make. Neither is wrong, but both need to be known.
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Founder of As Growth, an AI-first growth partner. He runs growth and strategy across partner businesses: OroEtic, Giojello, Equity Plus and others. Apply if you want to work with us.