What to Ask Existing Franchisees Before Joining a Franchise in Japan

When considering a franchise, speaking to existing franchise owners can reveal aspects of everyday operations that the franchisor’s documents do not show. However, neither success stories nor complaints from a single outlet can be taken as a prediction of your own future. To decide whether to join a franchise network, prepare questions that help you compare what you have been told with what happens in practice, while respecting the owner’s time and confidentiality.

1. Distinguish franchisee interviews from statutory disclosure

Speaking to existing franchisees is not a substitute for the franchisor’s own explanations. Read the draft agreement, disclosure documents and cost information first, then identify anything unclear before arranging a visit. This makes it easier to gather relevant facts rather than general impressions.

In Japan, Article 11 of the Act on the Promotion of Small and Medium-sized Retail Business requires franchisors that fall within the Act’s category of a “specified chain business” to provide prospective franchisees with written information and explanations before a contract is signed. This applies to businesses that meet the statutory criteria, including having mainly small and medium-sized retailers as franchisees. Not every franchise is subject to the same statutory disclosure obligations.

The Japan Fair Trade Commission’s guidelines on franchise systems under the Antimonopoly Act also cover franchises across a broad range of sectors, not just retail and food service. Franchisors and franchisees are independent businesses, and their dealings are subject to the Antimonopoly Act. The guidelines state that disclosure of information that helps prospective franchisees make an informed decision is desirable.

Do not confuse these provisions with a right to obtain any franchisee’s contact details or business records. If you ask for an introduction, the franchisee’s consent should be a prerequisite. A refusal or inability to arrange an introduction does not, on its own, establish unlawful conduct; also check whether alternative information is available.

2. Choose franchisees whose circumstances resemble your plans

Outlets introduced by the franchisor may include well-established businesses or those accustomed to hosting prospective franchisees. That is not inherently a problem, but the selection alone may not give you a complete picture. Ask the franchisor why it has recommended those particular outlets.

Choose whom to interview based on how closely their circumstances match your plans, rather than their profile or sales figures. Setting out the following criteria and sharing them with the franchisor can help you secure more relevant introductions.

• Location: Do customers visit for similar reasons, whether the outlet is near a station, in a residential area or within a shopping centre?
• Management arrangements: Does the owner work on site, or leave day-to-day operations to a manager?
• Time since opening: Can you distinguish the demands of the opening period from those of an established business?
• Experience: Did the owner start without relevant experience, or had they worked in the same field before?
• Outlet size: Are the sales floor area, staffing arrangements and services similar to what you are planning?

Where possible, speak to several owners in different circumstances. Even within the same brand, local recruitment conditions and customer demographics can affect funding requirements and working practices. Do not assume that the same brand will produce the same results.

If you contact an outlet directly, avoid busy periods and make it clear that you are seeking advice as a prospective franchisee. Do not press frontline employees for information about the owner’s income or relationship with the franchisor.

3. Ask about specific events, not just opinions

Simply asking, “Is this a good franchisor?” does not tell you what the owner is assessing. Asking instead, “What differed most between the explanations you received before opening and your experience once you started?” is more likely to produce examples you can use in your decision.

Link your questions to everyday situations, such as:

• What do you wish you had prepared before opening?
• In a typical week, which tasks take more time than you expected?
• When a problem arose that you could not resolve yourself, whom did you contact, and how was it handled?
• Which expenses or tasks were difficult to understand from the franchisor’s documents?
• What would you advise someone considering joining on the same terms today to check first?

If an answer raises concerns, follow up by asking when it happened, whether it was a one-off or recurring issue, and whether circumstances specific to that outlet played a part. If the franchisor’s contact person or support arrangements have changed, distinguish past experience from current conditions.

When discussing income or profit, pay attention to how figures are defined. What someone means by “the amount left over” may or may not account for the owner’s own remuneration, loan repayments, tax or reinvestment in equipment. Do not pressure anyone to disclose figures, and avoid basing an investment decision on numbers whose meaning you cannot establish.

4. Compare the answers and take discrepancies back to the franchisor

Make notes soon after each conversation, while your recollection is fresh. If you want to record the discussion, obtain consent beforehand. Also check whether you may share your notes or recording with professional advisers or the franchisor. There is no need to press for confidential contractual information or personal data.

Organise what you have learnt into three categories:

• Information reported as fact: Procedures followed before assistance was provided, tasks performed, or circumstances in which costs arose.
• The owner’s assessment: Subjective views such as “they are easy to approach” or “the workload is heavy”.
• Information whose relevance to you is uncertain: Terms under an older agreement, an unusual location or a temporary arrangement used in the past.

For example, an owner may say, “The franchisor helps straight away.” Whether that help is a contractual entitlement or an individual response from a particular representative is a separate question. You need to confirm with the franchisor whether the same support is included in your agreement.

If you find discrepancies with the franchisor’s explanations, set out the issues clearly without unnecessarily identifying the owner. Questions such as “Under the current agreement, who is responsible for what in this situation?” and “Which clause or document sets this out?” bring the discussion back to the terms on offer rather than judgements about individuals. Equally, favourable testimony is not a reason to accept unclear contract terms.

5. Use the findings to set conditions for your decision

After the interviews, classify the points you wanted to check as “resolved”, “further documents needed” or “difficult for me to accept”. Your decision should centre not on average owner satisfaction, but on whether the realities of running the business fit your finances, experience and personal commitments.

If additional costs appear likely, include them in your financial plan. If there are tasks you had not anticipated, decide who will take them on. Ask the franchisor to clarify any uncertainty about the scope of support, and consult a lawyer or another appropriate professional on important contractual issues. Do not assume that one outlet’s experience, described verbally, is guaranteed to apply to you.

If you cannot arrange an interview, do not immediately conclude that the franchisor is unsuitable. Instead, identify exactly what you will be unable to verify. If that uncertainty directly affects the investment required or the demands of running the business, you may need to hold off signing until it is resolved.

Practical takeaway: Choose franchisees whose circumstances resemble your own, use a consistent set of questions to gather specific examples, and compare their answers with the agreement and the franchisor’s explanations. Existing franchisees’ accounts are not a guarantee that joining is the right choice; they are a way to uncover questions you may have overlooked.