The Transparency Factor in Franchise Sales – Setting Expectations for Success

As I write this, there are clear sentiment challenges in our country— the economy, Bitcoin, the stock market, politics… oh my. But what really caught my attention this month is franchisee sentiment—specifically, what they wish franchisors had done differently in the sales process.

Why? Transparency.

While sifting through marketing materials at the Multi-Unit Franchise Conference, I noticed a trend that I find potentially dangerous—how franchisors are leveraging Item 19.

In my opinion, Item 19 should serve as a data provider, not a marketing tool. When it’s over-marketed, transparency diminishes, and so does the franchisee’s ability to gauge real success.

If I were building an Item 19, I’d focus on benchmarks that help buyers set up their pro forma and strategy. Here’s what I’d include:

✅ First-Year Sales – The most critical metric. Even if a buyer doesn’t hit the AUV, exceeding first-year projections can still signal success.

✅ State-by-State AUV – Our insights from the ALEC-Laffer Report (read here) show that Utah consistently ranks No. 1. That means the dollar stretches further there—important for franchisees calculating their ROI and franchisor fees.

✅ Real Estate Costs – A comparison of lease rates vs. AUV to show how site selection impacts sales performance.

✅ The "Crazies" – Benchmarks like value per seat in a restaurant or sales per hour to provide more actionable insights.

I looked at 2025 franchisee sentiment—what buyers say about transparency, emotions, and regrets post-purchase. Here’s what stood out:

• Costs were higher than expected.

• Construction costs.

• Financial transparency concerns.

• "I wish the franchisor told us to start with one location first. We didn’t open two due to COVID and real estate issues, and we lost our investment."

• Extra costs, including marketing.

• Had to learn real estate on the fly.

• Unexpectedly long timeline to find a location.

• The opening process took longer than anticipated.

• Lack of a clear opening guide—a basic to-do list wasn’t enough.

To address these concerns, franchisors must take a proactive approach:

1️⃣ Financial Transparency – Provide a detailed roadmap of costs, including contingency planning. 2️⃣ Construction & Real Estate Support – Offer preferred vendor pricing and a real estate training program. 3️⃣ Franchisee Onboarding Roadmap – Assign a launch mentor to each new franchisee. 4️⃣ Scaling Expectations – Encourage phased expansion, ensuring success at the first location before opening more. 5️⃣ Clearer Opening Process – Develop a step-by-step digital playbook with structured coaching calls.

I believe expectation setting is the fundamental difference between a successful, scaling franchisee (who maximizes royalties) and a franchisee who struggles, stalls, and quits.

Honestly, expectation setting isn’t just critical in franchising—it applies to marriages, politics, business, and leadership.