Short answer: evaluate a franchise the way you would evaluate a business partner, because that is what a franchisor is. Read the Franchise Disclosure Document carefully, talk to current owners without the sales team present, and get clear answers to the twelve questions below before you sign anything.
The documents
- Have I read the whole Franchise Disclosure Document? Franchisors in the United States must provide the FDD at least 14 days before you sign or pay. Read every item, not just the summary.
- What does Item 19 say about financial performance? Any earnings information a franchisor can legally share is there. If a salesperson quotes numbers that are not in Item 19, that is a warning sign.
- What is the total investment, not just the fee? Add the initial fee, startup costs, working capital and ongoing fees.
The model
- How does a franchisee make money, month to month? Look for recurring revenue. City Lifestyle publishers build annual advertising partnerships with local businesses, so the book renews rather than resetting.
- Is the territory protected? One owner per market, in writing.
- What does the franchisor handle and what do I handle? At City Lifestyle, headquarters handles design, editorial, printing, distribution and technology. The publisher handles the community and the client relationships. Make sure the split matches your strengths.
- How long has the model run this way? A model that has operated the same way for years, across many markets, has fewer surprises than one that changed last quarter.
The support
- Who trains me, and for how long? Look for a named coach through launch and training that continues afterward.
- How long from signing to opening? Get a typical range and what it depends on.
- How do franchisees connect with each other? An annual conference and an active owner network tell you the franchisor invests in the people, not just the brand.
The people
- What do current franchisees say? The FDD lists them. Call several, including some who left.
- Would I be proud to put my name on this? You will be the face of the brand in your community. Make sure it is one you believe in.
Frequently asked questions
How long should franchise due diligence take? Weeks, not days. Use the full 14-day FDD review period and talk to at least five current or former owners.
Should I hire a franchise attorney? Having an attorney who knows franchise law review the FDD and agreement is money well spent.
City Lifestyle's answers to these questions, including current market availability, are at future.citylifestyle.com.
