What should I check before buying a home-based franchise?

A franchise you can run from home needs no storefront. The model has its own questions, though. With no shop to attract passing customers, the way you find work matters even more, and a system built for home use should still make sense once you grow. Check the following before you sign.

Where the customers come from

Ask whether the franchisor supplies leads, runs national marketing or leaves you to find your own customers. Ask how your territory is defined and whether others can sell into it. A home-based owner depends on the system for visibility, so get the answers in writing and compare them with what current owners report.

What the system expects later

Some home-based franchises expect more as they grow: an office, a vehicle, extra staff or a minimum level of activity. Ask what growth looks like and when those expectations begin. Find out whether you can stay home as long as you wish, or whether the agreement pushes you to expand.

What ongoing fees buy

With no storefront, ask what the fees cover, such as brand, training, support and systems. Ask for a plain list of what each fee covers and what costs extra. Compare that with what you can do yourself. The page on comparing franchises to buy covers the wider checks.

Questions for others and your lawyer

• Speak to several current and former franchisees, not only those the franchisor suggests.
• Ask how long it took them to cover their costs and how much help they received.
• Ask the franchisor what happens if you want to sell or leave.
• Have your lawyer and accountant read the franchise documents before you sign.