Validation: The Most Important Step

Validation: The Most Important Step

The FDD gives you the facts, but the franchisees give you the truth. The list provided in Item 20 is your single most valuable resource. You must contact as many current and former franchisees as possible.

What to Ask Current Franchisees

1. Financial Reality: "How long did it take you to reach the break-even point and what was your actual initial investment?" (Compare this to the range in FDD Item 7).

2. Support and Training: "Was the initial training sufficient? Is the ongoing support from the corporate office reliable and valuable?"

3. System and Operations: "Are the systems and technology (POS, marketing platforms) effective and up-to-date?"

4. Relationship: "If you had to do it all over again, would you still buy this franchise?" (This is the ultimate gut-check question).

Why You Must Contact Former Franchisees

Former franchisees listed in Item 20—especially those who were terminated or left the system—can provide unfiltered insight. Ask them:

• Why did you leave the system?

• What were the biggest challenges with the franchisor?

• Did you make a profit or lose money?