Validation calls are THE most Important part of your due diligence work.  Here are several questions gathered by our experts to help you ask the right questions.

20 Questions To Ask Franchisees

Your VALIDATION CALLS  with a franchisee of a particular concept are where you learn 90% of what you need to know to make a decision if this is the right business for you.  This is where the “rubber meets the road”.   Remember, Franchisors want to sell franchises and they will tell you that their concept is the best thing since McDonalds, as they should.  The real gauge on how the concept is doing is to speak with other franchisees in the field.  They usually have no problem telling you how good or bad the concept is.   If more than 10% of the calls go poorly, meaning they really wouldn’t buy the franchise again if they had to do it over, it might be time to look for something else.  All concepts will have a certain degree of disgruntled owners.  Some people get into franchising (a business) for the wrong reasons or they can’t follow a plan.  You can’t force people to get up and go to work every morning it’s just something they have to want to do.   You need to ask yourself “who am I going to be more “like” if I buy the franchise, the guy doing poorly or the person doing extremely well?”

Something to remember when you are making your validation calls; understand that these people are busy operating their businesses, so don’t tie them up too long on the phone in the middle of their day. If you need to, email them and try to set up a time to speak.   Have your list of questions handy so you don’t forget anything.  Try to build rapport with these people; you may need to call on them later after you purchased the franchise to get further information or ideas from them.

If you’re a little unsure of the overall concept, offer to take that franchisee out to dinner or buy them lunch and discuss the business a little more thoroughly.  Always offer to pay (or pay)  for their meal and / or their time if you are going to spend that kind of time with them.If you want to understand how much money you can make in the franchise ask the question this way:
“If I was trying to make $60,000, $100,000 or $200,000 per year is that possible?”

1. If I was trying to make $100,000 (or whatever your number is) by my second year, how would you suggest I go about doing that?”

2. If I did exactly what the franchisor told me to do, how long do you feel it would take for me to hit a Break Even?

3. Do you know how long would it took to recover my initial investment?

4. How long have you owned your franchise?

5. What was your background prior to buying your franchise?

6. Is your franchise profitable?

7. Were your opening costs consistent with the original projections in the disclosure document?

8. Are you satisfied with the franchisor’s support?

9. Are you satisfied with the product or service?

10. Is the operations manual clear, up-to-date and adequate?

11. Are you satisfied with the marketing and promotional assistance provided by the franchisor?

12. Was the initial training and ongoing support sufficient for you to operate your business?

13. Is the franchisor fair and friendly to work with?

14. Does the franchisor listen and help you with your concerns?

15. Have any franchisees had disputes with the franchisor? What was their nature? Were they resolved fairly?

16. Do you know of any disputes between the franchisor and the government?

17. Do you know of any disputes with competitors?

18. Who are the major competitors?

19. What is the company’s biggest competitive advantage? What is the company’s biggest competitive disadvantage?

20. Would you make the investment again?