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What Strong Franchisee Validation Looks Like

Encouraging honest and transparent conversations between current franchisees and prospective franchisees is a must for brands, experts say.

The act of engaging in franchisee validation calls or meetings is a crucial step in deciding whether to invest in a brand. Prospective franchisees would do well to take advantage of the resources afforded to them in FDD Item 20 and reach out to as many of a brand’s existing franchisees as possible to gauge whether they want to sign on the dotted line. What’s more, brands would do well to encourage honest and transparent conversations between the two parties. 

Bob Jordan is a franchise owner with PuroClean, an emergency home services company that provides assistance with water damage, fire and smoke damage, mold removal and more. He bought his Seattle-area franchise in November 2016 and started field operations the following March. Jordan, who worked in the corporate world for many years before he decided to make a change, did extensive research before signing with PuroClean, meeting with PuroClean leadership and a current franchisee when he learned they would be hosting a meeting in Seattle. 

“I also called a number of PuroClean owners across the country,” Jordan said. “I spoke to one in Ohio, one in Texas, one in Florida and a few others mixed in, as well. I had a prepared list of questions that I wanted to ask and they answered all of my questions.” 

Jordan’s questions for existing PuroClean franchisees revolved around net profit, gross profit, hiring, operations, equipment and more. Of course, he also attended the brand’s discovery day. His research made him confident that he was walking into franchising with his eyes wide open, he said. “I just couldn’t find a hole in anything,” Jordan said. 

Ken Lineberger is the founder and CEO of Waters Edge Wineries, a franchise where owners essentially establish micro-wineries in their storefronts. During the discovery process, Lineberger’s team encourages candidates to reach out to current owners and even provides guidance on topics to inquire about. 

“We give our prospective franchisees a set of questions that we recommend that they ask,” Lineberger said. “We don’t tell them they have to ask them, but it gives them a guideline of what kind of things they’d want to know.” 

These questions include asking about the biggest challenge of opening a franchise with Waters Edge Wineries, whether its training and support help them operate the business efficiently, and if they could change anything, what would it be, Lineberger said. 

“We try to be open-minded that maybe not all of the answers are going to be perfect or favorable to us, but I think people appreciate that transparency that we’re trying to create,” Lineberger said. 

Prospective franchisees should not be shy about asking tough questions either, Lineberger said. After all, they’re making a huge life decision. “Most prospective franchisees are, in my opinion, too guarded in what they ask,” he said, noting that if a franchisee does not want to answer a particular question, they will certainly say so, which should ease prospects’ nerves about inquiring about whatever they want.

Bradford Smith, the Vice President of Franchise Development for trampoline park franchise  Rockin’ Jump, said he believes that franchisee validation is one of the best tools in a prospect’s arsenal. While prospective franchisees can certainly ask questions of their own choosing, Smith also encourages them to ask questions related to training, support—both during the opening process and ongoing—and financial matters. He too noted that prospective franchisees tend to  “clam up” when they reach out to existing franchisees and shouldn’t be shy about asking anything and everything on their minds.  

When it comes to getting existing franchisees to participate in validation efforts, Smith said, “I like to use the old saying, ‘A rising tide lifts all boats.’ It emphasizes to them that a new franchisee in the system will bring in more royalties and add to the marketing fund, which is to the benefit of everyone,” he said. Smith added that an underrated aspect of validation calls is the insight and feedback current franchisees are then able to provide on the prospect.

“Franchisee validation keeps the corporate team and support center on their toes, ensuring the managing of training, ongoing support, ongoing help to existing franchisees is strong so they could answer honestly that yes, they would invest in the brand again,” Smith said. 

Mayweather Boxing + Fitness CEO James Williams recommends prospective franchisees ask current franchisees how they decided the brand was a good fit for them, what training was like prior to opening and when the franchisee broke even, among other questions. Williams also advises brands coach current franchisees to be prepared to speak about a variety of things including their personal journey and ROI, in particular.

“[Current] franchisees should ask if the prospect has been to a discovery day yet,” Williams wrote in an email. “If not, the franchisee can explain how their discovery day experience helped cement their decision to move forward. Franchisors need to educate the franchisee that prospects are often looking for ROI information that franchisors are unable to provide outside of an Item 19.”

When brands encourage open and honest conversations between current and prospective franchisees, and when prospective franchisees have done extensive research and ask the right questions, everyone wins during the validation process.