How to Validate a Franchise

Why validation calls matter

The FDD tells you what the franchisor discloses. Validation calls tell you what franchisees actually experience. There is often a gap between the two. The Item 19 financial performance data may show average gross sales, but only a current owner can tell you what it costs to run the business day to day, how responsive corporate support actually is, and whether they would do it again.

Item 20 of the FDD includes a list of every current franchisee with their name and phone number. This list exists specifically so that prospective buyers can contact existing owners. Franchisors cannot legally prevent you from making these calls.

Step 1: Build your call list

Start with the Item 20 franchisee list from the FDD. Aim for at least 10 to 15 calls across different geographies and tenure levels. Include a mix of:

• Owners who opened in the last 1 to 2 years (recent experience with training, ramp-up)
• Owners who have been operating 5 or more years (long-term viability, renewal experience)
• Owners in markets similar to your target location
• Multi-unit operators (they chose to reinvest, which is a signal)

FranchiseVerdict offers franchisee contact lists extracted from Item 20 of the FDD, organized by location and ready for validation calls.

Step 2: Prepare your questions

Keep calls to 15 to 20 minutes. Be respectful of their time. Start by introducing yourself as someone considering the franchise and ask if they have a few minutes to share their experience.

The most important questions fall into four categories:

Step 3: Conduct the calls

• Call, do not email. Phone conversations reveal tone, hesitation, and enthusiasm that written responses do not.
• Take notes immediately. Write down key facts and your impression right after each call. Details blur together after 10 calls.
• Listen for patterns. One unhappy owner might be an outlier. Five owners reporting the same problem is a systemic issue.
• Note who does not answer. If a large percentage of franchisees do not return calls, that can itself be a data point.
• Do not skip former franchisees. Item 20 includes a separate list of owners who left the system in the past year. These calls are often the most revealing.

Step 4: Look for red flags

Pay attention if you hear any of the following across multiple calls:

• Actual costs significantly exceeded the FDD Item 7 estimates
• Revenue is well below what the franchisor represented
• Corporate support declined sharply after opening
• Owners feel the territory is too small or too competitive
• The franchise agreement was renegotiated at renewal with worse terms
• Multiple owners mention they would not do it again

Step 5: Cross-reference with data

After completing your calls, compare what you heard with the data available on FranchiseVerdict:

• Do the revenue figures owners shared align with the Item 19 data?
• Does the unit growth trend (Item 20 tables) match what owners told you about system health?
• Is the SBA default rate consistent with the financial picture owners described?
• Did the actual investment costs owners reported match the Item 7 ranges?

How many calls are enough?

There is no magic number, but most franchise attorneys and consultants recommend a minimum of 10 to 15 calls. For a major investment, 20 to 30 is better. The point is to hear from enough owners that you can distinguish individual experiences from systemic patterns.

If a franchise system has 500 locations, talking to 15 owners gives you a 3% sample. That is a small slice, but it is infinitely more information than relying solely on the franchisor's pitch.