Franchise validation calls are conversations with current and former franchisees that help you test what the franchisor has told you. They are one of the most useful steps in researching a franchise, because owners can describe the daily reality in a way no sales presentation can.
What franchise validation calls are
Most franchisors provide a disclosure document that lists current and former franchisees with contact information. Validation means contacting several of them and asking about their experience, costs, support, and results.
The calls are a chance to compare the story you were told with the story owners tell. Differences deserve follow-up.
Who to call
Do not limit yourself to the owners the franchisor recommends. Use the full list in the disclosure document and call a mix of people.
- Owners who opened recently and those who have operated for years
- Owners in territories similar to yours
- Owners who have left the system, who can explain why
- Owners with multiple units, who may know the system well
- A few at random, rather than only the most enthusiastic
Questions to ask in franchise validation calls
Be polite, specific, and ready to listen. Many owners are willing to share if you respect their time. Consider asking about the points below, and take notes on each call.
How accurate was the franchisor’s description of the startup costs and time to open? How much working capital did you need before the business paid you? What does the franchisor provide in training and ongoing support, and how fast does it respond? How do the royalties and marketing fees affect your income? Would you make the same decision again?
Listen for patterns
One unhappy owner might be an outlier, but several raising the same issue is a signal. Likewise, if every owner you speak to says the same positive thing, that tells you something too.
Pay attention to what owners avoid saying as well. Hesitation about earnings or support can be as informative as a direct complaint.
Combine calls with other research
Validation does not replace a legal and financial review. Read the disclosure document with an attorney, compare costs using our guides to the low-cost franchise and the home-based franchise, and learn the broader differences in franchise vs independent business opportunity. The FTC publishes guidance for franchise buyers.
Take franchise validation calls seriously
Schedule at least ten calls before you sign, and keep records of what you learn. If a franchisor discourages you from speaking with owners, treat that as a warning. Well-run franchise validation calls can save you from a costly mistake or give you confidence that you are choosing well.
More reading on franchise validation calls and franchise research
- Low-Cost Franchise Options: What to Compare Before You Buy
- Home-Based Franchise: Is It Right for You?
- Brand Licensing Opportunities: How to Evaluate Them
- Franchise vs. Independent Business Opportunity: Which Fits?
- Buying an Existing Franchise Location (Resale): Pros, Cons, and Costs
- Business Opportunity Scams: 12 Red Flags to Check
- FTC franchise guidance
Further reading: U.S. Census Bureau.
Keep reading
If this topic is useful to you, these related guides on SmartBizOpps are a good next step.
