Uncovering Franchise Histories: Importance and Strategies

When it comes to franchising, the decision to invest your time and money to become a franchisee is not one that should be taken lightly. You’re not just buying into a business; you’re entering a long-term partnership that can last for a decade or more.

To ensure you’re making an informed decision and aligning yourself with a brand that suits your goals, it’s crucial to understand where a franchise has come from and where it’s headed.

Why Franchise History Matters

Understanding the elements and moments that make up a franchise’s history can help you predict its future. The backstory of a franchise will provide you with insights into its resilience, cultural alignment, growth potential and ability to manage risk.

For example, you’ll want to look at the financial history and stability of a franchise to get a better perspective on what you will and won’t be able to accomplish as an owner and operator. It’s important to know whether a franchise brand has developed a consistent track record of success. Although the majority of businesses see an occasional bad year, that doesn’t mean failure is inevitable. But if a brand has performed poorly for a number of years straight, that could be indicative of some underlying issues.

“Looking at longer term performance, consistency is an important indicator of real success,” noted Franchise Chatter. “Consistency indicates stability and a franchise that will last. If you want to know where you stand, this is important.”  

How to Uncover the Truth

If you want to get to know a franchise’s history, then you’ll have to conduct some thorough research. There are several key roads you can traverse when it comes time to conduct your due diligence:

• Study the FDD

A brand’s Franchise Disclosure Document (FDD) can give you the best look at a brand’s written history. Within the FDD, which you will receive upon expressing interest in becoming a franchisee, you’ll find approximately 200 pages of information that showcase the franchise’s origin story, its historical performance through financial statements, litigation history, growth statistics, and fees and costs. The FDD will be the most useful tool in your research into a brand’s history.

• Meet with Franchisees

Chatting with both past and present franchisees alike can also give you valuable insight into the way a brand operates. Franchisees are the lifeblood of a franchise network and have walked the same path you’re now considering. They can provide you with real-world insights, tell you their long-term success stories, and make you aware of issues or problems that you may not have been privy to beforehand.

“Franchisees are also relatively unbiased — there is no financial incentive to lie,” said Corey Elias, founder of Franchise Captain. “They will tell you how it is: the good, the bad and the ugly.”

• Scour the World Wide Web

One of the best ways to investigate a franchise is through digital research. Go down the rabbit hole and read as many news articles and social media posts as you can. Check Facebook and X (formerly Twitter) for customer and franchisee comments, and YouTube for any reviews or testimonials. Starting with the franchisor’s social media is a great place to begin your online investigation.

“Go to the franchisor’s website and search for social media icons,” wrote Patrick McGinty, the founder of FranVue. “You should find at least two or more icons of the following: Twitter, Facebook, Instagram, LinkedIn and Pinterest. It’s important to research the social media presence of the franchise opportunities you are looking at before making your decision.”

This search will not only shed light on the negative and positive factors of the brand but will also highlight any significant events in the franchise’s history, any awards it may have received and its overall journey.

Every Fact Matters

Every bit of research is crucial when making a significant decision like investing in a franchise. Don’t cut corners as that can lead to costly oversights and missed opportunities. Take the time to get to know every aspect of the brand and gather all the information you need to make a well-informed decision.