What Good Franchisee Validation Sounds Like

Franchisee validation: quick facts

• What it is: candidate calls or visits with current and former franchisees, usually late in the discovery process.
• Where candidates find franchisees: Item 20 of your FDD lists current franchisees and those who left the system recently, with contact information.
• What good sounds like: specific, balanced, believable, and consistent with your FDD.
• What bad sounds like: vague praise, frustration with support, surprise about costs or ramp, or answers that sound rehearsed.
• The rule: franchisees shouldn't be coached on what to say, and nobody should hand them numbers to share. Any franchisor financial performance information belongs in Item 19.
• The fix for weak validation: better franchisee results and support, not better scripts.

The donut lesson: why franchisees trust other franchisees

Early in my first franchise, I wasn't getting the marketing results other franchisees were getting. Other owners told me it was corporate, or my market. I didn't buy that, so I called the top performers myself.

The first time, I just heard what they said. The second time, I listened for what they were doing differently than I was. They delivered four times the donuts I did. And instead of leaving coupons at the front desk, they looked for the first employee with a smile and built a relationship with that person, which got them into the break room. That changed everything for me. You've got to be okay being wrong.

That's what validation is. One owner asking another, "What's it really like, and what are you doing that I'm not?" Candidates trust that conversation more than any deck, because there's nothing in it for the franchisee except telling the truth.

What good validation sounds like

Good validation calls usually have these traits:

• Specific. "Training was two weeks, and my field rep visited in month two." Not "support is great."
• Balanced. Franchisees talk about what's hard, not just what's good. Candidates trust a franchisee who admits the first year was tough.
• Consistent with the FDD. What franchisees describe about fees, investment, and support matches what's disclosed.
• Unscripted. Different franchisees describe the business in their own words.
• Forward-looking. The best line a candidate can hear: "I'd do it again," or "I'm opening another one."

What bad validation sounds like

Watch for these, because candidates will:

• Long pauses or careful answers that sound like the franchisee's afraid to say the wrong thing.
• Surprise about costs, ramp, or working capital.
• Complaints that support disappeared after opening.
• Different franchisees telling completely different stories about the same system.
• Franchisees who sound coached or keep repeating the same phrases.
• Former franchisees with a story you'd rather candidates didn't hear.

Weak validation doesn't just lose deals. It hurts the value of the whole brand. I once helped a franchisee think through selling his units in an emerging brand. When I called my contacts, I learned the multiples buyers were paying in that system had dropped about a full turn in a year, because franchisees didn't trust corporate leadership. Distrust shows up everywhere, including the price of every location in the system.

Questions candidates ask on validation calls

Prepare your franchisees by telling them what candidates usually ask, not how to answer:

• Why did you buy this franchise?
• What was training like, and was it enough?
• How long did it take to open, and what surprised you?
• Was the investment in line with what you expected from the FDD?
• How responsive is the franchisor when something goes wrong?
• What does a typical week look like for you?
• What kind of person struggles in this system?
• Would you buy it again?
• If you could change one thing about the franchisor, what would it be?

If any of those questions makes you nervous, that's where your work is.

How to make validation stronger

You can't script your way to strong validation. You earn it. Here's the order I'd work in.

1. Fix the franchisee experience first

If your franchisees are struggling, that's your top priority, ahead of selling more franchises. Their results and their experience are what candidates will hear about.

2. Set accurate expectations during the sale

A lot of bad validation starts with an oversold candidate who became a disappointed franchisee. Tell the truth about ramp, hiring, and working capital, and stay inside your Item 19.

3. Give candidates the full list

Don't steer candidates only to your favorites. They can find everyone in Item 20 anyway. A candidate who only talks to your top performer may walk in with expectations your brand can't meet.

4. Respect your franchisees' time

Validation calls take time. Ask franchisees how they'd like to handle them, and thank them. Some brands rotate calls so the same few people don't carry all of them.

5. Close the loop

After a candidate validates, ask what they heard. If the same concern keeps coming up, it's a real problem in your system, not a candidate problem.

6. Track it

Treat validation feedback as a weekly KPI. (See Franchise Development KPIs.)

Validation and compliance

A few rules to keep clean:

• Don't coach franchisees on what to say, and never feed them numbers to share.
• Don't pay franchisees in ways tied to whether a candidate buys without your attorney's review.
• Remind your team that any financial performance information from the franchisor has to come from Item 19.
• Have counsel review your validation process once, especially if franchisees are also involved in any referral program.

Which path fits your brand?

These are the things we look for in a brand's documented numbers and readiness. They aren't predictions of what any franchisee will earn.

Franchise Accelerator (done-for-you). We'll be sending a lot of strangers to your franchisees, so strong validation is required. It also fits brands with documented payback of 3 years or less, cash flow in 12 months or less, a sellable Item 19, a strong founder, liquid capital for broker networks, and alignment on our model.

Copilot (done-with-you). Good validation is required, and part of the coaching is making it stronger. It also fits brands with documented payback within 4 years, cash flow in 12 months or less, a sellable Item 19, and a budget you're okay with.

Not ready yet. If validation calls regularly cool candidates off, pause new sales and fix the franchisee experience first.

FAQ

Where to go from here

If you're a franchisor wondering which fits you, take the Franchise Accelerator or Copilot fit test. If validation is cooling candidates off, read Why Franchise Brands Stall Before 10 Locations. And we break down everything else candidates check in What Franchise Candidates Check Before They Sign.