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A client recently asked for my thoughts on a new franchise they are considering.

When it comes to franchising, there is a unique allure to being one of the first. You imagine the chance to “get in on the ground floor,” to ride the wave of a promising new concept. But investing in a new franchise also comes with risks—a lack of history, unproven systems, and uncertainty about long-term potential.

Before diving in, you need to evaluate the opportunity through a clear, strategic lens. Here are five key factors I recommend focusing on.

1. Market Demand

The first question is the most critical: Is there a real, unmet demand for the product or service, or will you need to build the market from scratch?

Established franchises often succeed because they tap into a proven demand. A new franchise, however, can be a gamble. Ask yourself: Does the franchise solve a problem people already have? Are customers searching for this type of offering, or is it so novel that you will need to educate them first?

For example, a niche fitness concept might thrive in certain demographics but struggle in others. Research your local market. Talk to potential customers. Analyze whether the product or service fills a void in your community—or if it risks becoming a “solution looking for a problem.”

If the demand exists, you are halfway there. If it does not, prepare for an uphill battle.

2. Profitability

A franchise’s potential profitability is another vital consideration. This is where many new franchisees fall into the trap of optimism.

Even for new franchises, the franchisor should have piloted their concept with multiple successful locations. Are they profitable? If so, how long did it take to break even?

Do not just take the franchisor’s word for it—dig deeper. Review the Franchise Disclosure Document (FDD) to see if it includes an Item 19 Financial Performance Representation. If the franchisor has chosen not to provide financial projections, proceed with caution.

A new franchise may promise profitability, but without proof, it is just speculation.

3. Support and Training

Even the best franchise concept can fail without proper support and training.

A strong franchisor knows the importance of equipping their franchisees with the tools for success. For new franchises, the system may not yet be as polished as that of an established brand. Your job is to assess whether the existing training and support are sufficient—or if you will be left to figure things out on your own.

Here are some questions to ask:

  • What does the initial training program include?
  • Is there ongoing support, such as field visits or regular check-ins?
  • Are there clear processes for marketing, operations, and customer service?

The franchisor’s willingness to invest in your success is often the best indicator of their long-term commitment. If they seem disorganized or dismissive, that is a red flag.

4. The Franchise Disclosure Document (FDD)

The FDD is your roadmap to understanding the franchise opportunity. A thorough, transparent FDD signals a franchisor that values trust and clarity.

Review it carefully, focusing on key sections such as:

  • Initial fees and ongoing royalties
  • Obligations of both the franchisor and franchisee
  • Restrictions on suppliers or operations
  • Termination and renewal terms

Are the terms fair and reasonable? Is there room for negotiation?

Hire a franchise attorney. The FDD is long and complicated, but missing a critical detail could cost you in the future.

5. Franchisee Experience

Even if the franchise is new, there should be a few early adopters. Their experiences can offer invaluable insight.

Request a list of current franchisees from the franchisor, and make it a priority to reach out to them. Ask about their experience with:

  • The onboarding process
  • Day-to-day operations
  • Profitability and timeline to break even
  • The quality of franchisor support

Sometimes these conversations reveal what the marketing materials do not. Pay attention to their tone and willingness to share details—if they seem reluctant or dissatisfied, it may be a warning sign.

Final Thoughts

Investing in a new franchise can be a rewarding journey, but it is not for the faint of heart. The lack of an established track record means you are relying on your due diligence to uncover potential risks and rewards.

Take your time. Ask tough questions. And remember, you have more power than you think. Franchisors need early adopters, and this gives you leverage to negotiate terms that protect your investment.

The best franchise decisions are not made on excitement alone—they are made with strategy, foresight, and a willingness to walk away if the fit is not right.

Do your homework.

And when the right opportunity comes along, you will know.