Buying a Franchise: What to Ask Existing Franchisees

A brand presentation shows how a franchise is supposed to work. Conversations with business owners in the network help you understand how it works in practice. For a prospective buyer, this is a way to assess the franchise community’s culture: whether people feel able to discuss difficulties, whether the management team listens to franchisees, and whether everyday experience matches the marketing. The key is not to limit yourself to contacts supplied by the seller.

1. Build an independent selection of contacts

Ask the franchisor to introduce you to franchisees, but add contacts you have found yourself. You can find operating outlets through online maps, directories and individual businesses’ pages. First, check whether an outlet belongs to an independent franchisee or to the franchisor itself: the experience of an employed manager at a company-owned outlet is no substitute for that of someone who has bought a franchise.

Choose business owners in a range of circumstances. It is useful to speak to those who have recently opened, those who have been trading for years, those who run several outlets and those who have stayed with one. Make a particular effort to find franchisees in towns or cities and operating formats similar to yours: a small outlet in a regional city and a large establishment in the capital face different challenges.

Include former franchisees if you can find them through publicly available sources. A closure does not in itself prove that the brand is weak: family circumstances, a poor location or management mistakes may be the cause. However, failing to speak to franchisees who have left skews your findings towards those who remain.

For each contact, note:

• the town or city, operating format and approximate opening date;
• the person’s role: owner, manager or employee;
• how you found them: a referral from the seller or your own research;
• whether the outlet is still trading;
• how closely its circumstances match your proposed business.

This is a practical sample, not a statistical study. You cannot turn the number of positive responses into a percentage chance of success for your own business.

2. Use a consistent set of questions

Introduce yourself as a prospective buyer and arrange a convenient time in advance. Explain that you want to understand day-to-day operations, not obtain confidential commercial information. Avoid calling during busy periods, and do not try to extract contract terms from front-line staff.

Rather than asking a general question such as ‘Are you happy with it?’, ask about specific events. Using the same core questions will help you compare different people’s answers:

• What was the biggest surprise after opening?
• Which tasks does the owner handle personally each week?
• What did you have to work out for yourself when you had expected a ready-made solution?
• Think of the last difficult issue you raised with the management team: how did it unfold?
• How do franchisees discuss shared problems and get answers?
• What would you do differently if you were buying this franchise today?
• In your experience, who is this business model unsuitable for?

Ask people to explain the sequence: what happened, when they contacted the team, what response they received and how it ended. ‘They always help us’ tells you little without an example, as does ‘Nobody does anything’.

Be sure to discuss the owner’s role. If the person you are speaking to deals with staffing and operational issues every day, that is an important signal for a buyer expecting only occasional involvement. Ask whether the workload changed after the first few months: the launch phase and established operations are not the same.

At the end, ask whether you can follow up later to clarify particular facts. Only record the conversation with the other person’s consent; careful notes are sufficient for routine checks.

3. Separate facts from impressions and vested interests

After each conversation, divide your notes into three categories: verifiable events, personal judgements and assumptions. For example, ‘The email was sent on Monday and the reply arrived on Friday’ describes an event. ‘The team does not care about franchisees’ is a judgement. ‘Half the network will close soon’ is a prediction that needs independent checking.

Establish the context behind both negative and positive feedback. Did the owner work at the outlet themselves? Has the franchisor’s team changed since the incident described? Does the account relate to the terms you are being offered now? An old dispute may already have been resolved, while a successful launch may have benefited from exceptional arrangements.

Tactfully ask any franchisee recommended by the seller whether they receive a referral fee for introducing buyers. Such a payment does not make their account untrue, but it helps you assess the source’s interests.

Recurring accounts of specific events matter more than similar expressions of emotion. If several independent business owners describe the same problem, ask the franchisor to explain its causes and the measures taken to address it. Do not share other people’s documents, correspondence or names without permission: an anonymised description is usually enough for an initial enquiry.

4. Turn feedback into a decision before you pay

In Russia, commercial concession arrangements are governed by Chapter 54 of the Civil Code of the Russian Federation. Under this framework, a package of exclusive rights is granted, including the right to use a trade mark or service mark. The agreement must be in writing, and the grant of the right to use that package must be registered with Rospatent, Russia’s intellectual property office. Other contractual structures are also possible; their legal assessment depends on their substance rather than their title.

Russian law does not, however, impose a specific obligation to give a prospective franchise buyer a standardised pre-contract disclosure document listing all current and former franchisees. Refusing to provide contacts does not in itself prove a breach of the law. Nevertheless, Article 434.1 of the Civil Code requires good faith in negotiations, including when providing material information.

Create a table with four columns: observation, source, question for the franchisor and further checks needed. Raise specific discrepancies rather than making a general accusation that ‘franchisees are unhappy’. Ask for a written explanation and, where appropriate, evidence that problems have been addressed. Feedback is no substitute for reviewing the documents and does not guarantee an outcome.

Practical takeaway: before paying, speak to a range of people in the franchise community using a consistent set of questions, compare specific events and discuss any contradictions with the franchisor. If important questions remain without verifiable answers, postpone your decision to buy.