How to Conduct Franchisee Validation Calls: The Questions That Actually Matter
FDD Item 20 requires the franchisor to give you contact information for every current and former franchisee. These conversations are your most unfiltered data source — and the step most buyers either skip or do poorly. Here are the 20 questions that separate informed decisions from expensive mistakes.
What Is a Validation Call and Why It's Critical
A validation call is a conversation with an existing or former franchisee to verify the claims made by the franchisor during your evaluation. FDD Item 20 requires franchisors to provide a complete list of all current franchisees (with contact information) and all franchisees who left the system in the prior fiscal year.
This is the single most important step in franchise due diligence — and the one most buyers rush through. The FDD tells you what the franchisor wants you to know. Validation calls tell you what it's actually like to operate the business every day.
Important: If a franchisor tries to limit who you can call, or steers you only to “approved” franchisees, that's a significant red flag. You have the right to contact anyone listed in Item 20.
Who to Call First (Priority Order)
Former Franchisees
Most candid sources — they have nothing to lose and no relationship to protect. Found in the “Former Franchisees” section of Item 20.
Franchisees in Similar Markets
Their experience most closely predicts yours. Same market size, demographics, and competitive dynamics.
Multi-Unit Operators
They have pattern recognition across multiple locations. If experienced operators are buying more units, that's a strong positive signal.
Recent Joiners (1-2 Years)
Most relevant experience — they went through the current onboarding process, current training program, and current fee structure.
The 20 Questions to Ask (Organized by Topic)
💰 Financial Questions
1. “How does your actual revenue compare to what was presented in Item 19 (or during Discovery Day)?”
Why this matters: Reveals whether franchisor projections are realistic or aspirational.
2. “How much did you actually lose in Year 1, and how long until you reached break-even?”
Why this matters: Item 7 estimates don't capture working capital needs during ramp-up.
3. “What was your total out-of-pocket investment beyond what the FDD estimated?”
Why this matters: Hidden costs (permits, build-out overruns, hiring) often exceed FDD estimates by 15-30%.
4. “What's your annual owner's compensation after all expenses and royalties?”
Why this matters: The only number that matters — what you actually take home.
5. “If you could go back, what would you do differently with your finances?”
Why this matters: Captures lessons learned that no disclosure document can provide.
⚙️ Operational Questions
1. “How many hours per week do you actually work in the business?”
Why this matters: Reveals whether the franchise is owner-operated or can be semi-absentee.
2. “What's the single hardest operational challenge you face?”
Why this matters: Identifies the recurring pain point that determines daily quality of life.
3. “How would you rate franchisor support — both initial training and ongoing?”
Why this matters: Training quality varies enormously; this is your most reliable data point.
4. “How are vendor relationships managed, and do you feel you get fair pricing?”
Why this matters: Required vendor programs can significantly inflate your COGS.
5. “What's your biggest staffing challenge?”
Why this matters: Labor is typically the #1 or #2 cost — and the hardest to manage.
🤝 Franchisor Relationship
1. “How does the franchisor handle disputes or disagreements?”
Why this matters: Reveals corporate culture — collaborative vs. adversarial.
2. “Knowing what you know now, would you renew your franchise agreement?”
Why this matters: The ultimate validation question. Anything less than an enthusiastic 'yes' is a yellow flag.
3. “What does Item 20 not tell you about this franchise system?”
Why this matters: Invites candid feedback beyond what's legally disclosed.
4. “How often do you hear from your field support representative?”
Why this matters: Monthly visits = strong support. Quarterly calls = you're on your own.
5. “Has the franchisor made any significant system changes that affected your business?”
Why this matters: Menu changes, technology mandates, or territory adjustments can blindside franchisees.
🚪 Exit & Future Questions
1. “What do you think your franchise is worth today if you sold it?”
Why this matters: Reveals whether equity is being built or if it's just buying a job.
2. “Are you seeing resales happen in the system, and who's buying?”
Why this matters: Active resale market = healthy system. No buyers = concerning.
3. “Would you recommend this franchise to a close friend or family member?”
Why this matters: The personal referral test cuts through diplomatic non-answers.
4. “Where do you see your franchise business in 5 years?”
Why this matters: Growing operators signal system health; exit-minded operators signal problems.
5. “What surprised you most about owning this franchise?”
Why this matters: Captures the gap between expectations and reality that due diligence should close.
Red Flags During Validation Calls
Watch for these warning signs across your conversations:
How to Find Former Franchisees
Former franchisees are your most valuable validation source. They're listed in FDD Item 20 under a section typically titled “Former Franchisees” or “Franchisees Who Have Left the System.” The FDD must include anyone who left in the prior fiscal year, listed by state.
Use FranchiseIQ's FDD analysis to quickly extract and organize Item 20 data, including franchisee counts by state, turnover rates, and transfer activity.
Call Logistics: How to Get the Most from Each Call
How many to call
Minimum 10 calls, ideally 15-20. You need enough data points to distinguish individual opinions from systemic patterns. If a system has fewer than 30 franchisees, aim to speak with at least a third.
How to introduce yourself
“Hi, I'm [Name]. I'm evaluating [Franchise Brand] and I found your information in the FDD. Would you have 15-20 minutes to share your experience? I'd really appreciate your candid perspective.” Most franchisees are generous with their time — they remember being in your position.
Best times to call
Mid-morning (10-11am) or mid-afternoon (2-3pm) in their local time zone. Avoid meal rushes for restaurant concepts, Monday mornings, and Friday afternoons. If you get voicemail, leave a brief message and try again in 2-3 days.
Take detailed notes
Document each call with the franchisee's market, years in system, number of units, and specific answers. After all calls are complete, create a summary matrix to identify patterns across all conversations.
Complete Your Due Diligence
Validation calls are one piece of thorough franchise evaluation. Combine them with professional FDD analysis and legal review for complete due diligence.