Franchise Due Diligence in Taiwan: How to Interview Current and Former Franchisees

When choosing a franchise in Taiwan, look beyond the franchisor’s documents and find out how people who have actually run its outlets assess the relationship. Interviews are not about collecting praise or complaints: they are a way to check whether the franchisor’s claims hold true across different outlets. The approach below focuses on franchisee interviews, helping you build a traceable record of your assessment before joining a franchise network.

1. Build your own list, rather than relying on outlets selected by the franchisor

Franchisees recommended by the franchisor are worth interviewing, but they should not be your only source. Showcase outlets may have particularly good locations, have been trading for longer or receive extra staffing support. They may not be comparable to the outlet you plan to open.

Start by compiling a list from the brand’s outlet directory, publicly available maps and outlets’ social media pages. Record addresses, outlet formats, indications of when they opened and whether they are still trading. A map listing marked ‘permanently closed’ is only a starting point for further checks, not proof that a franchise has failed.

Try to include:

• New and established franchise outlets: compare the relationship during the opening phase with day-to-day operations later on.
• Similar outlet formats in different locations: avoid interviewing only franchisees at transport hubs or flagship sites.
• Owners whose outlets have relocated, changed hands or left the brand: find out why their status changed.

First establish whether the person you are speaking to is a franchisee, a manager or an employee at a company-owned outlet. Decision-making authority and support arrangements at company-owned outlets do not necessarily reflect those available to franchisees.

2. Ask consistent questions about events you can verify

Arrange interviews outside busy trading hours, explain that you are assessing the franchise and respect the other person’s right not to answer. Do not pose as a customer to obtain internal information. Get consent before recording, and do not ask anyone to breach confidentiality obligations.

Focus on specific events, rather than simply asking whether the brand is any good. You can use the following questions consistently across interviews:

• What important things did you only discover after opening that you had not understood before joining?
• What was the most recent issue for which you needed the franchisor’s help? Who took responsibility, how long did it take to receive a response and how was it resolved?
• When an outlet disagrees with the franchisor, is there a designated contact, a written response or a route for raising a complaint?
• Which day-to-day task depends most heavily on the owner’s personal involvement? How does that compare with what you were told during recruitment?
• If you were choosing again, what would need to change before you would join the franchise again?

Ask when each event occurred, what arrangements applied at the time and whether the issue has since improved. A statement such as ‘head office ignores us’ could refer to a one-off delay or a persistent lack of accountability. These should not be treated as the same thing.

3. Establish why former franchisees left

An outlet closing does not necessarily mean there is a problem with the brand. Equally, continuing to trade does not necessarily mean the franchisee is happy with the relationship. An expired lease, health issues, family circumstances, a transfer of ownership or conversion to a company-owned outlet can all explain changes to public listings.

When speaking to former franchisees, first confirm when they operated, their outlet format and how they left the network. Then ask which factors were personal and which concerned the franchisor’s systems or practices. If they mention a dispute, record their first-hand experience, personal interpretation and information heard from others separately.

For example, one owner saying ‘lots of people have left’ is not enough to assess the overall picture. You need to ask which outlets were involved, over what period and whether the figure includes relocations or changes of ownership. Do not classify every outlet you cannot find as closed, or calculate a brand’s attrition rate from an incomplete list.

For recurring issues, prepare an anonymised summary and ask the franchisor to respond. Do not share interviewees’ names, screenshots of conversations or identifying details without their consent.

4. Distinguish legal disclosure requirements from additional due diligence

Taiwan has no single dedicated franchise statute, but franchise transactions are not unregulated. General legislation, including the Fair Trade Act and the Civil Code, applies. The Fair Trade Commission has also issued its Disposal Directions (Guidelines) on the Business Practices of Franchisors, which address fair trading issues in franchise recruitment and contracting.

Under these guidelines, the franchisor should provide important franchise information ten days before entering into a franchise or preliminary franchise relationship, within a period deemed reasonable in the individual case, or within a period agreed by both parties. This includes information on fees, intellectual property rights, support, trading area plans, operating restrictions, and arrangements for amending and terminating the contract. Failure to provide this information without a legitimate reason may engage Article 25 of the Fair Trade Act where it constitutes obviously unfair conduct sufficient to affect trading order.

Do not mistake historical versions for current requirements. The current guidelines do not list a complete directory of franchise outlets, statistics on franchise terminations or arrangements for franchisee interviews as separate mandatory disclosure items. You can request these as part of your due diligence, but a franchisor’s failure to arrange interviews does not, by itself, establish a breach of the law.

Interviews are also no substitute for the information the franchisor should provide, a contract review or formal documentation. A franchisee’s willingness to share their experience does not mean the franchisor has fulfilled its responsibilities.

5. Turn interviews into a decision-making record

Create a comparison table with columns for ‘Franchisor’s claims’, ‘Franchisee experiences’, ‘Supporting evidence’, ‘Franchisor’s response’ and ‘Unresolved questions’. Date every entry so that experiences under an old system are not applied uncritically to a new contract.

Give weight to similar events described by several unconnected interviewees, whether the evidence corroborates their accounts and whether the franchisor is willing to offer specific explanations. A single positive review does not establish that a brand is reliable, and a single complaint does not prove that the same problem exists throughout the network.

If the franchisor’s and franchisees’ accounts remain contradictory, put your decision on hold and request written clarification. Where legal rights are involved, seek advice from a lawyer familiar with franchise transactions in Taiwan.

Practical takeaway: choose outlets independently, use a consistent set of interview questions, then cross-check the findings. Significant discrepancies that have not been resolved should remain on your action list, rather than being dismissed on the strength of verbal assurances.