Discovery Day and Beyond: Questions Your Attorney May Recommend Before You Sign

<p>Discovery Day can be energizing, but it is still a sales event. Your goal is to leave with clear, verifiable answers that align with the Franchise Disclosure Document (FDD) and the franchise agreement. Use the following checklist to guide your questions, focus your notes, and flag which issues to review with counsel before you sign. Laws and franchise practices vary by state, and franchisors may update their documents periodically, so be sure your review is current and tailored to your situation.</p>
<h2><strong><u>What Discovery Day Really Reveals (and What It Doesn't): Setting Objectives and Guardrails</u></strong></h2>
<p>Discovery Day is designed to showcase the brand, the team, and the culture. It can be useful for assessing fit and getting face time with decision-makers. It is not the place to rely on off-the-cuff promises. Keep these guardrails in mind: For related guidance, see <a href="https://www.heritagelawwi.com/franchise-system-changes-attorney-assesses-impact-on-unit-economics">Franchise System Changes: How an Attorney Assesses Impact on Your Unit Economics</a>.</p>
<ul>
<li><strong>Define your objectives in advance.</strong> Decide what you need to confirm: territory boundaries, training and support resources, supplier flexibility, unit economics, ramp-up timeline, and exit mechanics.</li>
<li><strong>Stick to written disclosures.</strong> Verbal statements are not binding. If you hear anything material that is not in the FDD or the franchise agreement, ask whether the franchisor will put it in writing or issue an addendum.</li>
<li><strong>Separate enthusiasm from evidence.</strong> Note every claim tied to revenue, costs, or timelines and ask where it appears in the FDD. If it does not, treat it as sales talk.</li>
<li><strong>Take structured notes.</strong> Log who said what, and flag follow-ups that require documentation. After the visit, compare your notes to the FDD and agreement with counsel.</li>
<li><strong>Do validation outside the event.</strong> Discovery Day is not a substitute for independent calls with current and former franchisees listed in the FDD.</li>
</ul>
<h2><strong><u>Tie Your Questions to the FDD: Items 1–7, 12, 17, 19 and 20</u></strong></h2>
<p>Use the FDD as your roadmap. Ask questions in a way that ties directly to FDD items so you can verify answers later. For related guidance, see <a href="https://www.heritagelawwi.com/franchise-renewals-attorney-evaluates-rights-timelines-fees">Franchise Renewals: How an Attorney Evaluates Your Rights, Timelines, and Fees</a>.</p>
<h3><strong>Item 1: The Franchisor and Affiliates</strong></h3>
<ul>
<li>What functions are handled by the franchisor versus affiliates (e.g., technology, supply, marketing)? If an affiliate provides core services, how are prices set and can they change without franchisee approval?</li>
<li>Are there recent ownership changes or planned capital events that could affect strategy, fees, or support?</li>
</ul>
<h3><strong>Item 2 and Management</strong></h3>
<ul>
<li>Who will manage field support, training, and supply logistics day-to-day after you sign? What's the ratio of support staff to operating units?</li>
<li>What is the typical response time for operational issues, technology outages, or emergency supply needs?</li>
</ul>
<h3><strong>Items 3 and 4: Litigation and Bankruptcy</strong></h3>
<ul>
<li>Have there been recent disputes relating to territory, supply, fees, or terminations? What operational changes were made in response?</li>
<li>How does the system monitor franchisee health to reduce disputes and surprise closures?</li>
</ul>
<h3><strong>Item 5–7: Initial Fees, Other Fees, and Estimated Initial Investment</strong></h3>
<ul>
<li>Which fees vary by market or location type? What components of the investment estimate are most likely to exceed the range shown?</li>
<li>For pre-opening costs (build-out, equipment, permits), what are the most common causes of overruns, and what contingency percentage do current franchisees recommend?</li>
<li>What working capital assumptions were used (weeks of payroll, inventory turns, marketing ramp)? How do those assumptions differ between urban, suburban, and secondary markets?</li>
</ul>
<h3><strong>Item 12: Territory</strong></h3>
<ul>
<li>How is the territory defined—radius, drive-time, population, or trade area? What mapping tool does the franchisor use, and will you be given a map exhibit to approve before signing?</li>
<li>What constitutes an “outlet,” “channel,” or “alternative distribution” that can operate inside your territory? How does e-commerce fulfillment, delivery platforms, and national accounts intersect with your protected area?</li>
</ul>
<h3><strong>Item 17: Renewal, Termination, Transfer, and Dispute Resolution</strong></h3>
<ul>
<li>Under what conditions can the franchisor terminate? Which defaults allow a cure, and which do not?</li>
<li>What are the renewal conditions, term lengths, and fees at renewal? Are remodels or technology upgrades required, and how are those specifications set?</li>
<li>What is the process and approval standard for transfers, including to family members or an entity you control? Are there transfer fees and required upgrades at the time of sale?</li>
</ul>
<h3><strong>Item 19: Financial Performance Representations (if provided)</strong></h3>
<ul>
<li>What assumptions underlie the reported figures (store age, location type, square footage, owner-managed vs. multi-unit operator)?</li>
<li>Are labor, occupancy, and marketing costs shown or excluded? If not shown, where can you find representative ranges or benchmarks?</li>
<li>How do the franchisor's averages compare to medians and quartiles? What percentage of units are represented or excluded, and why?</li>
</ul>
<h3><strong>Item 20: Outlets and Franchisee Information</strong></h3>
<ul>
<li>What explains unit openings and closures by year? Ask for a breakdown by market type to understand saturation or execution issues.</li>
<li>What is the average time from agreement signing to opening for the last year? What percentage of franchisees missed the development schedule milestones?</li>
</ul>
<h2><strong><u>Operational Realities to Probe on Site: Training, Support, Supply Chains, Technology, and Unit Economics</u></strong></h2>
<p>Go beyond brochures. Ask for demonstrations, samples, and specifics.</p>
<h3><strong>Training and Onboarding</strong></h3>
<ul>
<li>What does the initial training actually cover, and who must attend? How many hours are hands-on versus classroom or virtual?</li>
<li>What happens if your manager or key employee leaves soon after opening? Is retraining available, and how quickly?</li>
<li>What pre-opening checklist is required to be “grand opening ready,” and who signs off?</li>
</ul>
<h3><strong>Field Support and Coaching</strong></h3>
<ul>
<li>How often will field staff visit during the first year? What KPIs are reviewed and what corrective plans are used when targets are missed?</li>
<li>Is there a help desk for technology and operations? What are typical resolution times and escalation paths?</li>
</ul>
<h3><strong>Supply Chain and Approved Vendors</strong></h3>
<ul>
<li>Which items are single-sourced versus multiple-approved? What is the process and standard to approve a new vendor?</li>
<li>Are there rebates or volume discounts paid to the franchisor or affiliates? How are those disclosed and used?</li>
<li>What are current lead times for critical equipment and ingredients? Ask for recent examples of backorders and how they were handled.</li>
</ul>
<h3><strong>Technology Stack</strong></h3>
<ul>
<li>What POS, online ordering, loyalty, or scheduling systems are required? What are the update and replacement cycles?</li>
<li>What happens if third-party platforms change fees or policies? Who negotiates and who bears the cost?</li>
<li>Request a demo of reporting dashboards. Which unit-level metrics are available daily, weekly, and monthly?</li>
</ul>
<h3><strong>Unit Economics and Ramp-Up</strong></h3>
<ul>
<li>What is the operational breakeven model used by the franchisor? Which cost drivers (labor, COGS, rent, marketing) move that breakeven point the most?</li>
<li>What is the typical ramp timeline for sales and staffing? How do seasonality and local regulations affect timing?</li>
<li>What promotional playbook is provided for the first 90–180 days? What budget is assumed, and how are results tracked?</li>
</ul>
<p><strong>Mid-article consultation invitation:</strong> If you are preparing for Discovery Day or comparing FDD disclosures to what you are hearing from the franchisor, schedule a consultation to structure your question list and plan follow-up validation. Call <a href="tel:4142538500">414-253-8500</a> or use our <a href="https://www.heritagelawwi.com/contact-us">contact form</a> to discuss hiring counsel for due diligence, agreement review, and negotiation strategy.</p>
<h2><strong><u>Territory, Competition, and Expansion Rights: Questions to Clarify Boundaries and Encroachment Risk</u></strong></h2>
<p>Territory language can be technical. Clarify definitions and exceptions before you commit.</p>
<ul>
<li><strong>Protected territory mechanics.</strong> Is protection based on a fixed map or performance thresholds? Can the franchisor reduce your territory for missing sales targets, and how are targets set?</li>
<li><strong>E-commerce and delivery carve-outs.</strong> Can the franchisor or other franchisees sell into your area through online orders, marketplaces, catering, or delivery apps? If so, how are leads, fees, and attributions handled?</li>
<li><strong>National accounts and institutional sales.</strong> Are large accounts reserved to the franchisor? If service is required in your area, do you receive assignment or revenue share, and how are margins determined?</li>
<li><strong>Encroachment resolution.</strong> How are conflicts handled if a new location could impact your store? Is there a formal process for objection, analysis, and remedies?</li>
<li><strong>Development rights.</strong> Are multi-unit development options available? What are the schedules, performance hurdles, and consequences of missing milestones?</li>
<li><strong>Relocation and remodels.</strong> Under what conditions can you relocate within your territory? What triggers remodels, and how is timing determined?</li>
</ul>
<h2><strong><u>Fees, Working Capital, and Ongoing Costs: What to Validate Before You Commit</u></strong></h2>
<p>Map each cost to a line in the FDD and seek corroboration from franchisees operating in markets like yours.</p>
<ul>
<li><strong>Royalties and marketing contributions.</strong> Are royalties based on gross sales without deductions, and how are refunds/chargebacks handled? What does the brand fund actually pay for, and can you review recent fund reports?</li>
<li><strong>Technology, training, and renewal fees.</strong> Which fees adjust annually, and how is notice provided? Are there minimum spend requirements for local marketing or technology?</li>
<li><strong>Lease, build-out, and permitting risk.</strong> What timeline does the franchisor expect for site approval, permitting, and construction? If deadlines are missed due to external causes, are extensions available?</li>
<li><strong>Working capital cushion.</strong> What do current franchisees recommend for cash reserves through breakeven? What costs routinely exceed estimates (utilities deposits, insurance binders, pre-opening payroll)?</li>
<li><strong>Insurance requirements.</strong> What coverages and limits are required, and are riders needed for delivery, alcohol, vehicles, or professional services? How often are insurance specs updated?</li>
</ul>
<h2><strong><u>Defaults, Transfers, Renewals, and Exit Options: Understand Your Downside Protections</u></strong></h2>
<p>Plan for “what if” scenarios before you sign. Focus on cure rights, transfer standards, and exit pathways.</p>
<ul>
<li><strong>Defaults and cure.</strong> For monetary and operational defaults, how much time is given to cure? Are there any non-curable defaults (e.g., unapproved transfers, unauthorized products, trademark misuse)?</li>
<li><strong>Personal guarantees and cross-defaults.</strong> Who must guarantee (individuals, spouses, holding companies)? Do defaults under one unit cross-default other units or related entities?</li>
<li><strong>Renewal conditions.</strong> At renewal, can the franchisor require you to sign the then-current form of agreement? What changes commonly appear (fees, remodels, technology) at renewal?</li>
<li><strong>Transfer standards.</strong> What are the objective qualifications for an approved buyer? Will the franchisor use commercially reasonable criteria, and what is the typical approval timeline?</li>
<li><strong>Right of first refusal (ROFR).</strong> If the franchisor has ROFR, how is price matched and within what timeframe? What costs are you responsible for if ROFR is exercised?</li>
<li><strong>Post-termination obligations.</strong> What are wind-down deadlines, de-branding requirements, non-compete and non-solicit scopes, and continued liability for leases or vendor contracts?</li>
<li><strong>Dispute process.</strong> Where must disputes be brought, and is arbitration required? Are there waivers of jury trial or class actions? How are each side's costs handled in disputes?</li>
</ul>
<h2><strong><u>How to Validate What You Hear: Franchisee Calls and Document Follow-Up</u></strong></h2>
<p>Independent verification is essential. Use the FDD's Item 20 list to plan calls across a spectrum of performers and geographies.</p>
<ul>
<li><strong>Build a balanced call list.</strong> Speak with operators who opened recently and those with several years of results, single-unit and multi-unit owners, and a mix of markets similar to yours.</li>
<li><strong>Ask for numbers in ranges, not just anecdotes.</strong> Labor as a percentage of sales, average ticket, marketing ROI, and time to breakeven provide a clearer picture.</li>
<li><strong>Probe pain points.</strong> Ask about staffing, supply disruptions, technology outages, landlord issues, and the most valuable support they received from the franchisor.</li>
<li><strong>Confirm exceptions.</strong> If the franchisor described a special term or concession, ask franchisees whether they received it and how it worked in practice.</li>
<li><strong>Document alignment.</strong> After your calls, list any points that conflict with the FDD or agreement and raise them with counsel for potential clarification or addenda.</li>
</ul>
<h2><strong><u>Negotiation Touchpoints to Raise with Counsel</u></strong></h2>
<p>Franchise agreements are usually standardized, but some points may be discussed. What is possible varies by brand, timing, and your profile. Work with counsel to prioritize:</p>
<ul>
<li><strong>Territory exhibit clarity.</strong> Precise maps and definitions for your protected area and clear treatment of e-commerce and delivery sales.</li>
<li><strong>Development schedules.</strong> Realistic milestone dates with defined extension rights for landlord, permitting, or supply delays.</li>
<li><strong>Transfer and succession.</strong> Streamlined approvals for transfers to affiliates or estate planning vehicles; clearer standards and timelines for third-party sales.</li>
<li><strong>Cure rights.</strong> Longer or tiered cure periods for certain operational defaults, especially early in the term.</li>
<li><strong>Remodel timing and scope.</strong> Reasonable caps on frequency, notice periods, and cost expectations tied to systemwide standards.</li>
<li><strong>Vendor flexibility.</strong> A workable process to approve alternate suppliers meeting brand specs where appropriate.</li>
<li><strong>Dispute venue and governing law.</strong> Understanding the implications for cost and strategy; where appropriate, exploring modifications consistent with the brand's policies.</li>
</ul>
<h2><strong><u>Practical Discovery Day Question List You Can Use</u></strong></h2>
<p>Bring this list and adapt it to your concept and market:</p>
<ul>
<li>What assumptions sit behind the Item 19 figures, and how do they compare by market type?</li>
<li>What 3–5 KPIs the support team watches most closely during the first year, and what triggers intervention?</li>
<li>How will the franchisor handle a vendor failure that stops operations for more than 48 hours?</li>
<li>What specific milestones must I hit from signing to opening, and what happens if the landlord or city delays me?</li>
<li>How are alternative channels (delivery, catering, e-commerce) attributed to my unit, and how are associated fees split?</li>
<li>What does my territory map look like on the franchisor's system, and may I review and initial the exact map exhibit before execution?</li>
<li>What is the average time to field technician support when a POS failure occurs on a weekend?</li>
<li>What conditions must be met for renewal, and what material changes were included in the most recent form agreement?</li>
<li>For transfers, what financial and operational metrics must a buyer meet, and what is the typical approval timeline?</li>
<li>Which fees increased in the last two years, by how much, and what notice was provided?</li>
</ul>
<h2><strong><u>Next Steps: Organize, Compare, Decide</u></strong></h2>
<p>After Discovery Day:</p>
<ul>
<li><strong>Organize your notes.</strong> Sort everything by FDD item and agreement section. Highlight any statements not supported by the documents.</li>
<li><strong>Schedule validation calls.</strong> Reach out to franchisees from Item 20 to confirm key assumptions on costs, staffing, and ramp-up.</li>
<li><strong>Review with counsel.</strong> Walk through your findings, identify risks, and draft a focused list of clarifications or revisions to request.</li>
<li><strong>Confirm financing and timeline.</strong> Align your funding, lease strategy, and opening milestones with the obligations in the agreement.</li>
<li><strong>Decide with eyes open.</strong> If the brand declines to clarify material points in writing, reconsider signing or adjust your expectations.</li>
</ul>
<h2><strong><u>Common Questions from Prospective Franchisees</u></strong></h2>
<h3><strong>How should I prepare for Discovery Day to get useful, verifiable answers?</strong></h3>
<p>Build your question list directly from the FDD, focusing on Items 5–7 (costs), 12 (territory), 17 (defaults, renewal, transfer), 19 (performance, if provided), and 20 (outlets). Bring printed excerpts or digital notes with page references. Ask where each answer appears in the FDD or agreement and request written follow-up for anything new. Capture names, titles, and dates in your notes so you can verify later.</p>
<h3><strong>What parts of the FDD should drive my questions to the franchisor?</strong></h3>
<p>Start with Items 1–2 for structure and support, Items 5–7 for fees and investment, Item 12 for territory and carve-outs, Item 17 for downside protections, Item 19 for unit economics (if disclosed), and Item 20 for system trends and validation calls. Tie each question to a specific item so you can cross-check later with counsel.</p>
<h3><strong>How do I validate Item 19 financial performance representations with current franchisees?</strong></h3>
<p>Ask franchisees operating in markets similar to yours for ranges on sales, labor, COGS, rent, and marketing spend. Confirm store age, square footage, and operating model to compare like with like. Compare validation notes to the Item 19 assumptions and exclusions. Where you see gaps, ask the franchisor for context or additional, permitted disclosures in writing.</p>
<h3><strong>Which franchise agreement terms are commonly negotiated, if any?</strong></h3>
<p>Negotiation varies by brand and timing. In some cases, parties discuss clarity in the territory exhibit, development schedules, cure periods, vendor approval processes, transfer standards, and remodel timing. Treat any potential discussion as case-specific, and coordinate with counsel to frame limited, commercially reasonable requests.</p>
<p>If you are planning a Discovery Day or evaluating whether to move forward, we invite you to speak with our firm about representation. Call <a href="tel:4142538500">414-253-8500</a> or use the <a href="https://www.heritagelawwi.com/contact-us">contact form</a> to schedule a consultation, review your FDD and franchise agreement, and talk through next steps for due diligence and potential negotiation.</p>
<p><strong>Disclaimer:</strong> This article provides general information to prospective franchisees. It is not legal advice and does not create an attorney-client relationship. Laws and franchise regulations vary by state and by franchisor, and you should consult counsel about your specific circumstances and current documents.</p><h2><strong><u>Related articles</u></strong></h2><ul><li><a href="https://www.heritagelawwi.com/franchise-negotiations-framing-requests-without-triggering-denial">Franchise Negotiations: How an Attorney Frames Requests Without Triggering a Denial</a></li></ul>
<p>Attorney advertising. This page is for general informational purposes only and is not legal advice. Reading this page or contacting the firm does not create an attorney-client relationship.</p>