Questions to Ask a Franchisee
For anyone weighing a franchise and about to start validation calls: questions to ask franchise owners who already work under the franchisor you are thinking of signing with. The 55 questions follow the order of a call: how they bought in, the working week, the money, how the franchisor behaves, growth and exit, and what they would say looking back. Put them to existing franchisees you found yourself, and to at least one who has left the system, not only to the names you were handed.
Want questions from the whole vault instead? Try the random question generator.
The questions
Each question, and why to ask it
Buying in
How long have you owned your franchise, and what did you do before?
Why ask it
Tenure tells you how to weigh the rest of the call. An owner in the first year has mostly seen the opening, while one past year five has probably been through a fee rise, a slow quarter or a remodel request. Their old job also hints at which background the system suits.
What did it cost you to open in total, against the range you were quoted?
Why ask it
If they would sooner not give the figure, ask which way they missed and by roughly how much. Recent openings count for most here, since build-out and equipment prices from five years ago say little about yours.
Was there anything you were told before you signed that turned out differently once you were open?
Why ask it
This is the whole point of a validation call: holding the pitch up against someone who has lived it. If the answer is slow to come, prompt with sales, the owner's own hours and how much support turned up, then take whatever they name back to the franchisor.
How long did it take from signing to opening day, and what held it up?
Why ask it
Months between signing and opening can mean rent and loan payments with no sales coming in. Permits, landlord works and equipment delivery are common hold-ups, and an owner's real timeline is a sounder basis for your cash plan than the one in the brochure.
What did the training prepare you for, and what did you have to work out alone?
Why ask it
The length of the course tells you little; the gaps tell you more. Hiring, local marketing, payroll and dealing with a landlord come up often, and whatever this owner names is what you would be paying somebody to teach you, or learning the hard way.
Who from the franchisor was on site in your opening week, and what did they do?
Why ask it
Opening support is a staple of the pitch and varies widely in practice. A trainer who worked the counter for a week is a different thing from a regional manager who came for the ribbon and a photo.
Why did you choose this brand over the others you looked at?
Why ask it
Their reasons show what the sales process leans on. If every owner names the brand or the salesperson and nobody mentions what a unit earns, you know how much checking most buyers did before you.
How did you find this site, and how much say did the franchisor have in it?
Why ask it
Some franchisors pick the location, some only approve it, and some leave you alone with a commercial agent. Find out which, because a poor site is the mistake that is hardest to put right once the lease is signed.
How did you finance it, and would you arrange the borrowing the same way again?
Why ask it
You are not asking for advice, only for what the repayments felt like in a slow month. Listen for personal guarantees and a home put up as security, then take those terms to your own accountant or lender before you copy them.
Did you negotiate anything in the agreement, and did you use a franchise lawyer?
Why ask it
Buyers are often told the contract is the same for everyone. An owner can say whether anything moved for them, such as the territory or the opening deadline, and whether the lawyer earned the fee. What can be negotiated, and what protection a buyer has, depends on the country or state, so put that to your own lawyer.
Day to day
How many hours a week are you personally in the business, and how many did you expect?
Why ask it
Get both numbers, because the gap between them is the part nobody put in the brochure. If they are still on sixty hours in year three, ask whether the unit earns enough to pay a manager, or whether the owner's unpaid time is what makes it work.
Could you take a week off, and what happens here when you do?
Why ask it
A plain test of whether they own a business or a job with debt attached. Listen for a trained second in command, what that person costs, and how long it was before the owner dared to leave.
What takes up most of your week: customers, staff, or paperwork for the franchisor?
Why ask it
Buyers picture themselves doing the thing on the sign. Many owners spend the week on rosters, compliance reports and covering for no-shows instead, and it is better to hear that now than to find out you dislike the actual job.
How hard is it to hire and keep staff, and what are you paying at the moment?
Why ask it
Local pay can move faster than a franchisor's model does. A current wage figure lets you test whether the margins you were shown still hold where you plan to open, and the turnover tells you how much of an owner's week goes on recruiting.
Do you have a manager you can rely on, and what does it take to keep one?
Why ask it
Semi-absentee ownership is sold on the idea of a good manager. Ask what that person earns, how many came and went before this one, and what happened to sales the last time the role was empty.
Where do your customers come from: the brand name, the location, or marketing you do yourself?
Why ask it
A royalty is paid largely for the brand, so it matters how much of the trade the brand brings in. If the answer is mostly the site and the owner's own effort, weigh what the fee is buying.
How much do you spend on local marketing on top of the ad fund, and what has worked?
Why ask it
Many agreements require a minimum local spend in addition to the national contribution. An owner can tell you which of it was wasted, which saves you repeating the experiment with your own money.
What does the required technology do well, and where does it get in your way?
Why ask it
The point of sale, booking and ordering systems are chosen for you and billed monthly. Small complaints are normal. An owner who keeps a second system on the side because the official one cannot do the job is a bigger sign.
What goes wrong most often in an ordinary week, and who fixes it?
Why ask it
A broken machine, a late delivery, nobody to open on Saturday: every system has its regular failure. Whether the fix comes from the owner's own phone and pocket or from a help desk tells you how alone you would be.
The money
How did your first year compare with the numbers you were shown before you signed?
Why ask it
Ask for the comparison, not the raw figures, since the gap is what decides whether you can afford this. An owner who will not share sales with a stranger will often still say whether they came in above or below, and by roughly how much. If they were shown no figures at all, ask what they built their own forecast on.
When did you break even, and what did you live on until then?
Why ask it
The break-even date matters less than what funded the wait. Owners who lived on a spouse's salary, savings or a second mortgage are describing the real capital requirement, which can sit well above the working capital line in the paperwork.
Have you earned back what you put in, and if not, when do you expect to?
Why ask it
Covering the monthly bills is not the same as getting your money back. An owner who has recovered the investment can say how many years it took. One who has not will have a date in mind, and how sure they sound about it tells you something too.
Which running costs caught you out once you were open?
Why ask it
Opening budgets get the scrutiny, and the monthly surprises arrive later: card processing, delivery platform commissions, insurance, repairs, waste. If the franchisor gave you a disclosure document, look for each cost the owner names and see whether it is in there.
What do the royalty, the ad fund and the other monthly fees add up to as a share of your sales?
Why ask it
The headline royalty is only one of the deductions. Once technology, software, call center and marketing charges are stacked on top, the combined share is the figure to put in your own forecast, and plenty of owners know theirs by heart.
How often have fees or required spending gone up since you signed?
Why ask it
A fixed royalty rate can sit still while everything around it climbs: technology fees, ad fund contributions, mandatory software, paid training, new point of sale hardware. Owners can list these quickly, and the total drift since they signed is a fair guide to what to allow for.
What do you have to buy from approved suppliers, and how do those prices compare with sourcing it locally?
Why ask it
A franchisor can earn a margin or a rebate on what it requires owners to buy, on top of the royalty. Pick one high-volume item and ask what the same thing would cost down the road. A wide gap is a cost that never shows in the fee table.
Have you been required to remodel or replace equipment, and what did it cost you?
Why ask it
Refurbishment cycles can cost more than a year of profit, and the obligation usually lives in the agreement rather than in the sales pitch. Ask when the next one falls due and whether the franchisor contributes or arranges financing.
What do rent and labor each take out of sales in a normal month?
Why ask it
These two lines decide most of what is left after the franchisor is paid. Compare the answers with rents and wages where you plan to open, because a model that works at their rent may not survive yours.
Do you pay yourself a wage, and how long was it before you could?
Why ask it
Profit on paper can hide an owner who works full time for nothing. A unit that only breaks even because nobody pays the person running it has not really broken even, so ask what a hired manager would cost in their place.
Which months are slow here, and how do you get through them?
Why ask it
Seasonality rarely appears in a presentation built on annual averages. Knowing the weak months tells you when not to open, and how much cash has to be in the account before the quiet stretch arrives.
Does the franchisor set your prices or require discounts you have to honor?
Why ask it
A national coupon can bring in customers at a price that loses money in a high-rent location, while the royalty is still charged on the sale. Ask about the last promotion they were told to run and what it did to the month. How far a franchisor may control prices differs by country, so check how it works where you are.
The franchisor
When you call the franchisor with a problem, what actually happens?
Why ask it
Support shows in mechanics rather than adjectives: whether a person answers, how long a reply takes, whether the field consultant visits or just sends a scorecard. Ask about the last problem they raised and how it ended.
How often do you see your field consultant, and does the visit feel like help or an inspection?
Why ask it
The field consultant is the franchisor as you will meet it week to week. Ask how many they have had since opening as well, since a new face every year means nobody at head office knows the unit.
Have you been able to try anything of your own, and what happened when you asked?
Why ask it
Systems differ a great deal in how they treat initiative. The revealing part is the response to the request: a franchisor that says no politely is very different from one that sends a compliance letter, and you would be working under whichever it is.
Do you see the advertising fund working in your own market?
Why ask it
The contribution is fixed by the agreement, and what it buys locally is uneven. Owners can say whether campaigns reach their area or whether the money goes on national brand work that does little for a single store in a small town. Ask as well whether they are ever shown how the fund is spent.
Has the franchisor opened or approved another unit near you, or sold into your area some other way?
Why ask it
A protected territory often has gaps: online orders, delivery apps, kiosks, a sister brand. Owners who have watched a new unit take a slice of their sales can tell you exactly how the territory clause read once it was tested.
What has changed at the top since you signed: the owners, the leadership, or the direction of the brand?
Why ask it
Franchise systems get sold, and a new parent company may want different things from the one the owner joined. Long-serving franchisees can compare the before and after, which no current brochure will do.
How does the franchisor treat an owner who is struggling?
Why ask it
You hope never to need the answer, and it is still a good test of the relationship. Some systems send help, defer fees or broker a sale. Others send default notices, and owners in a region tend to know which kind theirs is.
When a new product or program is rolled out, who pays for it, and what happens if it flops?
Why ask it
New menus, services and loyalty schemes usually arrive with equipment to buy and staff to retrain. Ask about the most recent one in particular: what it cost the unit, and whether anyone at head office admitted it when it did not sell.
Have you had a dispute with the franchisor, and how did it end?
Why ask it
How it ended matters more than whether it happened. Listen for whether there was any route short of lawyers, and whether raising it affected their renewal, territory or standing. A settlement can bar an owner from discussing it, so note a firm refusal and do not push.
Is there an independent franchisee association, and does the franchisor deal with it?
Why ask it
An association the franchisor has to negotiate with gives owners a collective voice when fees or terms change. Ask what it last pushed back on and whether anything came of it. An advisory council run by the franchisor is a different animal, so find out who chooses its members.
Which clause in the agreement has mattered most since you signed, and did you see it coming?
Why ask it
Owners tend to name one clause they skimmed and later met in real life, often on territory, renewal or required purchases. Write it down and ask your own franchise lawyer how the same clause reads in the version you have been handed.
Did the franchisor ask you to take my call, and is there anything in it for you if I sign?
Why ask it
It is a fair question and most owners take it without offence. Someone who was hand-picked or stands to earn a referral payment can still be honest, but weigh the praise differently and add a few calls to owners you found yourself.
Growth and exit
How are the other owners near you doing, and has anybody closed or sold in the last two years?
Why ask it
Closures and quiet resales are the facts least likely to be put in front of you. Get names if you can and try to reach the people who left, since a former owner has less to lose by being frank.
Have you opened a second unit, or would you if one came up?
Why ask it
Owners putting their own money into another unit is about the strongest endorsement a system gets. If nobody you call wants a second one, ask why, and notice whether the reasons are about the franchisor or about being tired.
Which owners in the system do best, and what do they do differently?
Why ask it
The answer shows what drives results here: location, hours on the floor, local selling, or several units sharing one manager. Check it against your own plan, particularly if the top performers all have something you will not.
What happens when your term ends, and do you expect to renew?
Why ask it
Renewal can mean signing whatever agreement is current at the time, with different fees and a remodel attached. Owners near the end of a term know what they have been offered. Renewal rights also vary by country and state, so ask how they work where you would operate.
If you wanted to sell tomorrow, what would you have to do, and who approves the buyer?
Why ask it
Resale terms decide whether you are building an asset or renting a job. Transfer fees, franchisor approval of buyers, a right of first refusal, and the years left on the term all change what you could realize. Owners who have tried to sell describe the friction precisely.
What have units like yours sold for lately, and how long did they take to find a buyer?
Why ask it
Resale prices are the market's opinion of the business with the sales pitch removed. A unit that sat unsold for two years, or went back to the franchisor for very little, shows you what your own exit could look like.
Looking back
What kind of person does well in this system, and who should stay away?
Why ask it
A franchisor's ideal candidate profile is written to widen the pool. An owner's version is narrower and more useful, and it often comes down to temperament: someone content to follow a manual, or someone who can sell face to face.
What would you do differently in your first year?
Why ask it
This draws out operating lessons instead of regrets about the decision. Hiring a manager sooner, spending less on the fit-out, starting local marketing before opening day: whatever they name, you can build into your plan at no cost.
What do you wish someone had told you before you signed?
Why ask it
It lets an owner be critical without accusing anyone, which is why it so often produces the most useful sentence of the call. Put it to every owner and pay attention to anything two of them mention independently.
What should I be asking the franchisor that I have probably missed?
Why ask it
Owners know where the pitch is thin. They will hand you the question about supplier rebates, the territory map or the last fee increase, already worded the way that gets a straight answer.
Knowing what you know now, would you buy this franchise again?
Why ask it
The answer often sits in the pause before it. Yes with a caveat is normal and healthy. A quick unqualified yes from someone the franchisor introduced is worth less than a hesitant one from an owner you found on your own.
Who else should I talk to, including someone who has left?
Why ask it
Try to end every call with another name. Owners know who sold up, who was pushed out and who is quietly unhappy, and an introduction from a peer gets you a franker conversation than a cold call does.
Doing the diligence
Practical guidance for the conversation itself
Who to call, and how many
- Speak to more owners than the handful a salesperson offers, eight or ten if the system is big enough, and include markets similar in size to yours. A system can work in a dense suburb and struggle in a town of nine thousand people.
- In the United States, the franchise disclosure document contains a list of current outlets and of franchisees who left the system in the past year. Work from that list and not from the references you are offered. Other countries have their own disclosure rules, or none, so ask a local franchise lawyer what the franchisor has to hand over.
- Call the people who exited. They have the least left to protect, and their reasons are what a sales process has no incentive to show you. Some will have signed a confidentiality clause on the way out, so a polite refusal from a former franchisee proves nothing either way.
- Call more than one owner in the same region if you can. Two owners with the same market and different results usually means the difference is operational, which is useful for judging your own odds.
- Visit at least two locations in person during a busy hour and again during a dead one. Then go back and ask the owner what you saw.
What to ask on one call
- Nobody will sit through the whole list. Pick two or three questions from each group for a twenty-minute call and rotate the rest across your other calls, so that by the end every question has been put to someone.
- Start with how they bought in. Those questions are easy to answer, they get the owner talking, and they earn you the right to ask about money ten minutes later.
- Put the same core questions to every owner: first-year numbers against the projections, hours in the business, what happens when they call the franchisor, and whether they would buy again. Identical questions are what make the answers comparable.
- Say at the start who you are, how you got their number and how long you need. Existing franchisees take a lot of these calls, and one who knows it will be fifteen minutes is far more generous than one who fears an hour.
- Write your notes as soon as you hang up, with the owner's years in the system, market size and number of units beside them. An answer means little once you have forgotten who gave it.
How to ask about money
- Do not open with how much do you make. Ask about specific lines instead: rent per square foot, food or product cost as a share of sales, labor as a share of sales, what the ad fund and technology fees run per month.
- Bring your own draft profit and loss projection and ask them what is wrong with it. Owners who will not name a revenue figure will happily correct your assumptions line by line.
- Ask separately about the first year and about now. A mature location and a new one have almost nothing in common, and franchisors sometimes show averages that mix them.
- In the United States, any earnings figure a franchisor gives you is supposed to appear in the financial performance representations section of the disclosure document. Treat verbal projections that are not in that document as sales talk, and put nothing into your plan on the strength of them.
Reading what you hear
- Look for repetition across owners rather than intensity from one. One angry owner may be a poor operator; four owners naming the same supplier problem is the system.
- Separate complaints about the business from complaints about the franchisor. Long hours and hard hiring are retail; being fined for a menu change is a relationship.
- Notice who checks whether you were referred by corporate before answering. That reflex tells you how safe owners feel speaking freely.
- Take hesitation as content. Some owners feel they cannot say certain things without putting their standing with the franchisor at risk, and a careful non-answer on fees or territory may be the clearest signal you get.
Before you sign anything
Have the franchise agreement reviewed by a lawyer who works on franchising, not a generalist, and do it before you pay a deposit. Ask for every promise made in conversation to be written into the agreement or a side letter: whether a spoken promise from a discovery day can be relied on later depends on the contract and on local law, and many agreements say that only the written terms count. Read the sections on territory, transfer, renewal and termination as carefully as the ones on fees, since those decide what happens on the worst day, not an average one. Then take the longest stretch any owner told you they went without a wage, work out what your household costs over that time, and check the money exists before you commit to the rest.