Franchise Validation Calls: The Complete Guide

Why Validation Calls Matter

The FDD is a legal document filled with disclosures. The franchise sales team wants to close the deal. Existing franchisees are the only source of unfiltered, real-world truth about what it is like to operate the brand day to day.

Getting Contact Information

Item 20 of the FDD lists every franchisee in the system with their name, address, and phone number. The franchisor is required by law to provide this list. Use it.

**Pro tip:** Call franchisees who are NOT on the list of "recommended references" the sales team gives you. Those are hand-picked success stories. The ones not on the list will give you a more balanced perspective.

The 20 Questions to Ask

**Financial Reality:** 1. How long did it take to reach break-even? 2. What was your actual total investment vs. the Item 7 estimate? 3. Is your annual revenue in line with what was represented in Item 19? 4. What is your net profit margin after all franchise costs? 5. Has your revenue grown, declined, or stayed flat year over year?

**Operations:** 6. How many hours per week do you work? 7. How effective is the franchisor's training program? 8. Is the ongoing support responsive and helpful? 9. How much does the franchisor's approved vendor program cost vs. open market? 10. Have you had any unexpected costs or mandatory upgrades?

**Relationship with Franchisor:** 11. Does the franchisor listen to franchisee feedback? 12. Is the marketing fund spent effectively? 13. Have there been any disputes, and how were they resolved? 14. Would you describe the relationship as a true partnership? 15. If you could change one thing about the franchise, what would it be?

**The Most Important Questions:** 16. Knowing what you know now, would you buy this franchise again? 17. Would you recommend it to a family member? 18. Are you planning to add more units or exit the system? 19. What is the biggest challenge you were not prepared for? 20. What advice would you give someone considering this brand?

How to Get Honest Answers

• **Call, do not email.** People are more candid on the phone.
• **Call during off-hours.** Early morning or late evening, not during their lunch rush.
• **Be upfront about why you are calling.** Most franchisees remember being in your shoes and are willing to help.
• **Avoid franchisees in your direct territory.** They may see you as competition.
• **Talk to at least 10 franchisees.** Two or three is not enough to identify patterns.
• **Talk to franchisees who have left the system.** Item 20 lists recent closures and transfers. Find out why.