How to Evaluate a Franchisor Before You Sign

1. Will you provide a Financial Performance Representation?

Good answer: Yes, here it is, and here is the basis for it — how many units, over what period, and what is excluded.

Bad answer: We are not permitted to discuss earnings. That is not accurate. Providing one is optional in Canada, but a franchisor who provides none should be able to explain why, and that explanation should be about consistency of data rather than evasion.

2. What is the range of unit performance, not the average?

Averages conceal. A system with a $600,000 average might have most units between $500,000 and $700,000, or it might have a few at $1.5 million and many at $250,000. Those are entirely different propositions.

Good answer: A distribution, including what the weakest quartile looks like.

3. What separates your top performers from your bottom performers?

Good answer: Specific and operational — advertising discipline, average job value, staffing timing, retention.

Bad answer: Vagueness, or “attitude.” If a franchisor cannot articulate what drives the spread in their own system, they may not know.

4. What does the first twelve months look like, month by month?

Good answer: A realistic build with a range, and an honest statement of when an owner typically starts drawing a proper salary.

5. What are my fixed monthly costs at zero revenue?

The most useful question about risk that almost nobody asks. Why it matters more than the fee schedule.

6. How many units opened, and how many closed, in the last three years?

Good answer: Both numbers, with context on the closures — retirements, relocations, underperformance, owners without an exit plan.

Bad answer: Only the openings. Every system has departures. A franchisor who cannot discuss theirs is managing a narrative.

7. What is the split between corporate and local marketing?

Buyers consistently overestimate how many leads arrive from head office, and the disappointment lands in month four. In our system roughly 25% of marketing comes from corporate and 75% is driven by the owner locally. How that works in practice.

Bad answer: Anything implying your calendar will be filled for you.

8. What does the training actually consist of, and what happens after it?

Good answer: Specifics. Duration, format, who delivers it, and what ongoing support looks like — weekly operational calls, monthly financial reviews, field visits.

9. Can I speak to any franchisee I choose, including ones who have left?

This is the single most informative question on the list, and the answer matters more than any document.

Good answer: Here is the full list. Call whoever you like.

When we hand over that list, it has successful, happy owners on it and grumpier ones. Candidates are told to speak to both, because you need both sides. If somebody does not want to be part of this system, we would rather they found that out before signing than after.

Bad answer: A curated selection of three names.

10. What is your customer satisfaction measurement, and who conducts it?

A franchise is only as good as the brand’s reputation with the people who pay it. Ask for a number and its source. Handyman Connection Canada’s Net Promoter Score is 80, measured on an ongoing real-time basis. Ask also for review counts and average ratings across locations — those are independently verifiable in a way a private survey is not. What a score like that actually means to a buyer.

11. How is my territory defined, and can it change?

Good answer: A precise method. Ours uses Canada Post Forward Sortation Areas, with each territory covering roughly 50,000 to 150,000 households, flagged in the system so only the owner can work them.

Bad answer: Anything vague, or a radius with no reference to population.

12. What happens when I want to sell?

Ask this on day one, not in year eight. Who approves the buyer? Is there a transfer fee? Does the franchisor have a right of first refusal? Have franchisees in this system actually sold, and at what multiple?

13. What are the renewal terms?

What happens at the end of the initial term. Is renewal automatic, conditional, or at the franchisor’s discretion? Is there a fee? Can the terms change?

14. What happens if I have a dispute with you?

Good answer: A clear process, and willingness to describe how a real dispute was resolved.

15. Why would someone not be a good fit for this business?

Possibly the most revealing question of the fifteen.

Good answer: A specific, unflattering, honest description. We have had an owner who ran a perfectly viable business for five years and then left, not because it failed but because he did not want to talk to people. The business was fine; the fit was wrong. A franchisor who has thought about this will have examples.

Bad answer: “Anyone can do this with the right attitude.” Nobody believes that, including the person saying it.

Beyond the content, three signals.

Do they ask you questions back? A serious franchisor is evaluating you as hard as you are evaluating them. If the whole process feels like a sales funnel, you are in one.

Do they try to slow you down? Good franchisors encourage you to take longer, involve a lawyer, and speak to more owners. Urgency is a warning sign, and any incentive expiring inside your statutory review period should be treated as one.

Do they volunteer bad news? The strongest signal in franchising is a franchisor telling you something that does not help them sell.

Several of these questions are answered in the Franchise Disclosure Document, which in seven Canadian provinces you must receive at least 14 days before signing or paying anything. Litigation history, fees, territory and the franchisee list are all in there. What the document contains and how to use those 14 days.

The questions the document does not answer are the ones above about culture, fit and honesty. Those you have to ask a person.

Nothing on this list is designed to catch a franchisor out. They are the questions we would want someone to ask us, and the ones we ask candidates to put to the owners they call.

A franchise is a long relationship with real financial consequences. Both sides benefit from finding out early whether it fits.

The full eight-step process sets out where this due diligence sits in the sequence.