Franchise exhibitions put hundreds of brands in front of prospective buyers in a single weekend. The International Franchise Show, returning to ExCeL London on 17-18 April, hosts over 250. The challenge is knowing which questions cut through the sales pitch.

The UK has no franchise-specific regulation. Franchisors are not legally required to disclose performance data, franchisee turnover or financial projections. The British Franchise Association operates a voluntary accreditation scheme, but membership is optional. This makes due diligence the buyer’s responsibility.

John Pratt, senior partner at Hamilton Pratt and author of the UK’s standard text on franchise law, puts it directly: ‘If you are approaching a franchisor and you sense it is adopting an approach that could be likened to “does the prospective franchisee have a pulse and a cheque book?”, you need to walk away.’

Questions for the franchisor

Five questions reveal more than any brochure. Ask how many franchisees have been recruited in the last five years, and how many have left the system in the same period. Ask why they left. Request the average profitability of existing franchisees. Ask whether banks will finance this franchise (lenders conduct their own due diligence, so their willingness to lend is a useful signal). Finally, ask for a complete list of all franchisees, not a selection.

Good franchisors expect these questions. Pip Wilkins, chief executive of the British Franchise Association, notes that ‘franchising outperforms general business because of the strong support systems in place. But prospective franchisees must ensure their chosen franchisor is one that truly invests in its network.’

If a franchisor resists providing a full franchisee list, or offers only hand-picked contacts, treat that as information in itself.

 

Questions for existing franchisees

Franchisors present projections. Franchisees report what actually happened.

Ask what the first year actually cost, including expenses not mentioned in the franchise prospectus. Ask how long it took to break even. The typical pattern, according to franchise lawyers, is substantial losses in year one, break-even in year two, modest profit in year three, stronger returns thereafter. If a franchisor’s projections suggest faster returns, ask franchisees whether that matched their experience.

Brian Duckett, former chairman of The Franchising Centre, recommends a simple approach: ‘Talk to existing franchisees and see what they think.’ Ask whether the franchisor delivered on training promises. Ask what happens when problems arise. Ask whether they would make the same decision again.

 

What to look for in the agreement

Franchise agreements in the UK typically run for five years with options to renew. They are largely non-negotiable; franchisors want consistency across their network. This does not mean you should skip legal review.

Shelley Nadler, legal director at Bird & Bird, warns that ‘even if you are provided with a great deal of detailed financial information, financial projections are not promises of performance. The success of your franchise will depend on your own individual skills and commitment.’

Key areas to examine: territory definitions (are they exclusive, and what happens if postcodes change?), renewal conditions, termination clauses, resale rights and any restrictions on what you can do after leaving the franchise. A solicitor who specialises in franchise law will identify provisions that could cause problems later.

Using the show effectively

The International Franchise Show runs seminars on financing, legal considerations and sector-specific topics. These provide context. But the real value is access to both franchisors and existing franchisees in the same space.

Prepare your questions before arriving. Take notes. Collect contact details and follow up afterwards. The conversations at a franchise show are a starting point, not a conclusion.

Admission is free but registration is required.