Validation calls are one of the most critical steps in the franchise sales process. In this interview, Carmen Chavez de Hesse, franchise expert, describes why these calls are so important and shares her list of must-ask questions.
Some of the items Carmen hits on are:
The importance of validation calls (0:10)
Questions to ask (0:31)
How many calls to make (1:51)
Making validations calls is one of the most important parts of your franchise discovery process.
Why are Validation Calls Important?
A validation call is your opportunity to talk directly with current and past franchisees. Unlike your conversations with the franchisor, you can ask the franchisees absolutely anything you want to ask them, which includes their profitability and their break-in.
Questions to Ask
If I had to come up with half a dozen questions that I think are really important to ask, they would be:
Did the franchisor keep their promises regarding the initial investment?
Did you open your location within the ranges that were presented in the franchise disclosure document?
Did you feel competent to open your location after their initial training? Initial training for franchises is usually done in a university format, and you need to make sure that when you come out of there, you’re confident in being able to own and operate this business model.
You’ll also want to ask an existing franchisee when they broke even. How long did it take them?
You can ask them about their profitability.
I think one of the most important questions you can ask them is: would they do it again? To me, that’s a loaded question. You want to know if they had the opportunity to make this same decision, would they.
If it’s somebody who’s exited the system, you definitely want to find out why they exited. Was it a life-changing event? Was it because they weren’t happy with the franchise system? Or, was it because they really just saw that running a doggie daycare just wasn’t for them at the end of the day. All of those are okay.
How Many Validation Calls Should You Make?
You want to call every single franchisee that’s located in item 20 of a franchise disclosure document. You want to call every single company that’s listed in there.
If you get a couple that are not so positive, maybe not to worry if it’s a brand of 20-50 units. But, if you have an emerging brand that only has 10 units and you get a lot of unhappy franchisees, then I would say walk on.