Buying a franchise: how to seek references from franchisees

A franchise presentation shows how the franchisor intends its system to work. Conversations with existing franchisees can reveal how it operates in practice. When choosing a franchise network, do not simply collect endorsements: use consistent questions, comparable experiences and examples you can verify. References are no substitute for legal or financial due diligence, but they can highlight where you need to dig deeper.

1. Do not speak only to the most successful franchisee

Ask the franchisor to arrange conversations with several franchisees operating in different circumstances. The experience of a long-established outlet in a prime location is not enough on its own to assess a proposed start-up in a smaller town.

Look for people who know the system from different perspectives:

• a recently opened franchisee who still clearly remembers the challenges of starting out;
• a franchisee who has been operating for several years and can discuss the long-term relationship;
• the operator of an outlet similar in size and location to the one you are planning;
• if possible, a former franchisee who has left the network.

Ask why these particular franchisees were recommended. Introductions arranged by the franchisor are a useful starting point, but may naturally present a more favourable picture than the experience of the network as a whole.

Do not immediately draw serious conclusions from a refusal. A franchisee may be busy and is under no obligation to share business information with an unfamiliar prospective buyer. However, if the franchisor blocks all independent contact, ask for a clear explanation and factor that uncertainty into your decision.

2. Ask about specific situations rather than opinions

An answer to ‘Is it worth joining?’ compresses too many personal circumstances into a single sentence. It is better to prepare a short list of questions in advance and cover the same topics in every conversation.

When discussing the start-up phase, ask which tasks they underestimated, what caused delays and which expenses arose sooner than expected. Rather than demanding confidential figures, try to understand the types of costs and tasks involved. One particularly useful question is: ‘What would you have planned differently if you had known then what you know now?’

For day-to-day support, ask for a recent example of a time when they needed help. Who did they contact? How long did it take to receive a useful response? Was the issue actually resolved, or simply passed on? This can tell you more than general praise for the support available.

Explore how the franchise network works, too. Can franchisees speak freely to one another? Are there opportunities to share experiences? Does the franchisor listen to recurring feedback? Ask for an example of a franchisee suggestion that led to a change, and another that was rejected.

At the end of the conversation, distinguish satisfaction from suitability. Someone may be happy with a model that does not suit your schedule, experience or appetite for risk. Ask what kind of entrepreneur they would recommend joining, and who they would advise against it.

3. Understand your rights under Hungarian law

Hungary has no standalone, comprehensive franchise act, but it would be wrong to say that franchise agreements are unregulated. Act V of 2013 on the Civil Code contains specific provisions on franchise agreements, known in Hungarian as ‘jogbérleti szerződés’. General contract rules also matter, including the duties to cooperate and provide information before entering into a contract.

There is no generally mandatory franchise disclosure document prescribed by dedicated franchise legislation, nor a statutory fourteen-day franchise disclosure period. Guideline 2002/1 (IX. 18.) of the Hungarian Franchise Association recommends that a prospective franchisee should be able to study the agreement at least fourteen days before signing. This is an industry self-regulatory recommendation, not law.

An important distinction when seeking references is that the duty to disclose material circumstances does not automatically give you a right to obtain every franchisee’s contact details or business information. Sharing personal data must also comply with the General Data Protection Regulation, or GDPR, and trade secrets must be respected.

A practical solution is for the franchisor to obtain the franchisee’s consent to contact first. Do not request internal reports or copies of agreements from someone who may be bound by confidentiality obligations. In your own conversation notes, record only the information needed to make your decision.

4. Turn the answers into a checklist of points to verify

After each conversation, separate specific events, personal assessments and claims that still need checking. ‘Starting out was difficult’ is an assessment; a missed opening support visit is a specific event whose circumstances you can investigate.

Look for recurring patterns, but do not treat a handful of interviews as a representative survey. Similar complaints may point to a shared problem in the system, but they may also reflect different local circumstances or an earlier issue that has since been resolved. Always note the period to which each experience relates.

Raise inconsistencies with the franchisor without making them personal. Ask whether the procedure has changed and what documentation confirms the current commitment. If a particular element of support is crucial to you, ask for it to be included in the agreement rather than relying on another franchisee’s positive experience.

Practical takeaway: speak to a range of franchisees, ask the same questions and clarify recurring uncertainties in writing before signing. A good reference does not make the decision for you; it helps you ask more precise questions.