Franchisor references
What it means
The disclosure document must list current franchisees and, importantly, those who have left in recent years, with contact details. These are your references, but unlike the ones a franchisor hand-picks, they are the whole list.
Speaking with a broad sample, especially former franchisees, is the single most valuable due-diligence step, because franchisees describe the reality behind the sales pitch.
In practice
Do not rely only on the franchisor's suggested references. Use the full list from the disclosure document, call several current and former franchisees, and ask the ones who left why.
A real example
Rather than call only the two glowing references the franchisor suggested, a buyer works through the disclosure document's full list and phones two former franchisees, whose candid accounts change her decision.
Franchisor references, FAQs
How do I get honest references about a franchise?
Use the full list of current and former franchisees in the disclosure document, not just the franchisor's suggestions. Former franchisees in particular give the most candid picture.
Why call former franchisees?
They have no reason to sell you the system and often reveal problems current, franchisor-selected references will not. Their reasons for leaving are especially telling.
See the full franchise glossary, the Fee Index or our buyer guides.