As you narrow your search for the right franchise, be sure to reach out to franchise owners at your top contenders. Current franchisees are often the best sources for unbiased and unfiltered information and can help you validate or invalidate the franchises you are considering. We’ve put together this list of questions to ask franchisees to give you a starting point for your conversations with current franchise owners.
Madeleine Zook, a multi-brand, multi-unit franchisee, explains the importance of talking to franchisees before investing on a recent episode of FBR’s podcast, From A to Franchisee. Listen now.
7 Important Questions to Ask Before Buying a Franchise
- Opening: Did the opening of your business go according to plan?
- Training: How effective and useful was your initial training? Are you satisfied with the ongoing training provided by the franchisor?
- Support: How much franchisor support do you receive on a day-to-day basis?
- Revenue: What was your first year gross revenue? What is it now? When did you make a profit?
- Profitability: Has profitability been in line with your expectations and those laid out by the franchisor? How did financing affect your profit?
- Franchisee Community: How helpful are the other franchisees in your system? How often do you reach out or speak with your fellow franchisees?
- Open Ended: What do you wish you had known going into business that you did not? Is there anything you would have done differently? Are there plans to grow?
Related Resource: Top 10 Questions to Ask the Franchisor Before You Buy
Opening
1. Did the opening of your business go according to plan?
It’s nearly impossible to plan for everything, but since franchisors have helped numerous franchisees launch their businesses there shouldn’t be too many unexpected variables. Of course, every franchise system and franchisor is different and provides varying levels of support, so ask other franchisees for their first-hand experience. Ask them what didn’t go according to plan and what surprised them.
Training
2. How effective and useful was your initial training? Are you satisfied with the ongoing training provided by the franchisor?
Training and support are important for franchisees, especially if you’re entering an entirely new industry with no prior experience. So, just as you should ask the franchisor about the level of training they will provide, be sure to vet their response with the actual experiences of franchisees in the system. Beyond initial training, most franchisors will offer ongoing training, which can help keep you up to date on industry trends or system improvements and changes. Ask the franchisees you speak with to rate the training on a scale of 1-10. What did they find most useful and in what area do they wish they received more in-depth training?
Support
3. How much franchisor support do you receive on a day-to-day basis?
Support is one of the many benefits of buying into a franchise system. As Tim Larsen, co-owner of Spherion Utah, remarked, “I investigated other franchise opportunities and was underwhelmed by the corporate support they offered, given the fees their franchisees pay. The Spherion team is genuinely all-in on helping us succeed and grow the franchise. Spherion’s business model of having extensive corporate support for collections, payroll, marketing, and legal issues means we can laser focus on operations and sales.” Be sure to ask for specific examples of how the franchisor provides support and how easy it will be for you to request support day in and day out.
Revenue
4. What was your first-year gross revenue? What is it now? When did you begin turning a profit?
While a franchisor can give you estimates and averages, a franchisee can provide real individual data on profitability and revenue. This is of course one of the most important areas to explore with franchisees of any brand you’re considering as it will help you better understand the true numbers behind the investment you are considering.
One significant benefit of speaking with a current franchisee about their first-year revenue versus their current revenue is gaining a clearer understanding of the franchise’s growth potential. This allows you to set realistic expectations and better anticipate the financial trajectory of your own business.
Hearing firsthand about the challenges and strategies that contributed to revenue growth can also provide valuable lessons and guidance for navigating your own franchise’s development.
Profitability
5. Has turnover and profitability been in line with your expectations and those laid out by the franchisor? How did financing affect your profit?
Not only does this question help you to understand potential profitability of the franchise you are considering, it also helps you gauge the accuracy—and in some cases, the honesty—of the franchisor.
Learning about the franchisee’s experiences with loans, interest rates, and payment structures offers a clearer picture of the financial realities involved in running the business. It helps potential franchisees understand how financing decisions impact cash flow, operational budgets, and overall profit margins. These conversations can also reveal strategies for managing debt effectively and highlight potential pitfalls to avoid.
Franchisee Community
6. How helpful are the other franchisees in your system? How often do you reach out or speak with your fellow franchisees?
The franchisee community can be a tremendous asset to new owners or even those who have owned their business for years. As Lindsay Verdun of TSS Photography remarked, “I think what I love most about our franchise organization is that we truly have a family atmosphere. We have so many colleagues that we now call friends. We love being able to share our knowledge on professional levels and offer compassion and an ear on personal matters as well. It’s the relationships we have developed in this business that keep us going during the tough times.”
Open Ended
7. What do you wish you had known going into business that you did not? Is there anything you would have done differently? Are there plans to grow?
The answers to this question can be very interesting and extremely helpful as you set out on your franchising journey. You’ll hear responses that are general to franchising and you’ll also get answers that are very specific to the business or industry you’re interested in. For instance, when asked what he would have done differently looking back, Dennis Monroe, who owned a ColorAll franchise from 2005 to 2014, said, “If possible, I would have negotiated a tapered franchise fee and a reduced minimum franchise fee … 7% or a $1,000 minimum is a large load during down markets. Also, when the company was sold the new owner did not provide the same level of support as the previous owner; therefore, an opt-out option upon sale of the company would have been better for our situation.”
Consulting a current franchisee about potential expansion plans can provide great insights for a prospective franchisee. By understanding whether the franchise is focused on growth, you can check the overall trajectory and stability of the business.
If the current franchisee is aware of upcoming expansion plans, it often signals a strong and thriving franchise model, backed by solid market demand and brand success. Plus, such discussions can reveal how the franchisor supports its franchisees during expansion, offering a clearer picture of long-term opportunities and challenges.
This approach enables you as a prospective franchisee to make more informed decisions about the potential profitability and scalability of your investment.
How to Find Franchisee Contact Information
Most franchisees will be more than willing to offer their advice and share their experience with you. They have all been in your shoes and likely went through the same validation process. You can find a list of all current franchisees and their contact information in the Franchise Disclosure Document (FDD). Here you’ll also see contact information for any franchisee who left the system in the prior fiscal year.
In addition to speaking with franchisees, you can review franchisee satisfaction reports published by Franchise Business Review. These reports offer third-party survey data across eight key categories crucial to franchise success. Reviewing our list of the top-rated franchises, accessing the satisfaction reports from brands that make them publicly available, speaking with franchisees, and asking tough questions of franchisors are all important steps in the franchise validation process.
Looking for more tips and advice on finding the right franchise for you? Listen to our weekly podcast, From A to Franchisee, for interviews with current franchisees and franchise experts. Listen now.
