Where validation calls fail.

The problem

Validation is the step where a buyer stops listening to the brand and starts listening to its owners. Rob Lancit’s list of fifteen validation questions, published in Forbes Business Council in October 2025, includes a reminder to consider the source and stay skeptical. This page is about what that reminder means in practice: the specific ways an honest, well-run set of calls can still give a buyer the wrong picture, and the part of the disclosure document that corrects each one.

1. The list is made of survivors.

Item 20 of the Franchise Disclosure Document carries two lists of names. One is every current franchisee. The other is owners who left: those whose outlet was terminated, canceled, not renewed or otherwise stopped doing business under the franchise agreement, plus anyone who has not communicated with the franchisor within 10 weeks of the document’s issuance date. That second list covers only the most recently completed fiscal year. An owner who left two years ago is not named anywhere in the document. A buyer who calls only current owners is, by construction, interviewing the people for whom the business worked well enough to stay.

The fix: call from the former franchisee list first. Some numbers will be disconnected, and a pattern of disconnected numbers is information too.

2. A sale can hide an exit.

The Item 20 tables count outlet activity over three fiscal years, and they count transfers to new owners separately from terminations, non-renewals and closures. When a struggling owner sells to a new one, the location stays open and the sign never changes. A system with few closures and many transfers can be turning over owners while its outlet count looks steady.

The fix: read the transfer column beside the closure columns. When you reach an owner, ask how long the location has had its current owner, and who had it before.

3. Some owners are not free to talk.

If franchisees signed confidentiality clauses during the last three fiscal years, Item 20 must say so, using a statement the FTC Franchise Rule prescribes. In substance it warns that some current and former franchisees have signed provisions restricting their ability to speak openly about their experience, and that not all of them will be able to talk with you. An owner who politely declines, or who answers every question with some version of “it’s been fine,” may be bound by that clause rather than satisfied.

The fix: find that statement before you start dialing. Item 20 also names franchisee associations the franchisor created, sponsored or endorsed, and independent ones that asked to be listed. Where one exists, it is a second, organized source of owner views.

4. The owner bought a different deal.

An owner who signed eight years ago signed the agreement in force eight years ago. The royalty, the fees, the territory terms, the required spending and the people in the support department may all have changed since. The agreement you would sign is the one attached to the current disclosure document under Item 22.

The fix: ask every owner when they signed and what has changed since, and give the most weight to owners who opened in the last two or three years, because their deal and their support team are closest to yours.

5. Good feelings are not numbers.

An owner can like a brand and still be losing money, and can resent the franchisor and still be doing well. Neither feeling tells a buyer what the business would earn in their own market. The franchisor may state what outlets sell or earn only in Item 19, and only with a reasonable basis and written substantiation. The owners on the phone are not making that disclosure and can share their own figures if they choose.

The fix: set what owners tell you beside Item 19, line by line. If the franchisor makes no financial performance representation at all, note it, because the owners then become the only source of real figures, and their willingness to share them matters more.