Founder & CEO, Capital City Roofing | Co-Founder & CSO, BuilderLync | RT3, NRCA & Roofing Alliance Member

Roofing Contractor magazine just published a piece on franchise due diligence titled 5 Questions Before You Sign, reported by Tanja Kern and featuring construction attorney Trent Cotney. I am quoted in the article. The published version got the bones of what I said. This post is the full skeleton, the muscle, and the scar tissue.

I am writing this because I lived it. Years before I founded Capital City Roofing, I operated under a roofing franchise. The exit was instructive. The questions in the Roofing Contractor article track almost exactly with the questions I wish I had asked before I signed. I am not going to name the franchise I previously operated under. The point of this post is not to relitigate that relationship. The point is to give the next contractor staring at a franchise disclosure document a more useful checklist than I had.

If you are looking at a franchise opportunity right now, read the original article first. Then come back here. I am going to walk through each of the five questions, tell you what I missed the first time, and explain how the same five questions ended up shaping the architecture of the Capital City Roofing Licensing Platform when I built it.

Question 1: Run the royalty math at every revenue tier

The Roofing Contractor piece opens with this: scrutinize the royalty structure against what you are actually getting. That is the right instinct. The trap is that most operators run the math at the revenue level they hit today, decide it looks reasonable, and sign.

Royalty drag is not linear in pain. It compounds against you the more successful you become.

Try this exercise before you sign anything. Build a simple spreadsheet with three rows: your current annual revenue, double that, and ten times that. Then apply the franchise royalty against each row. If the royalty is a percentage of revenue, the absolute dollars get loud fast. If it is a tiered or capped structure, model the breakpoints honestly. Then write down what services you are receiving in exchange at each tier.

The question is not "is this fair at year one." The question is "is this fair at year five, when I am running the operation that I am building toward."

When I ran this exercise after the fact, the answer was no. The services I was paying for did not scale with the dollars they were costing me. The franchise had priced itself for an operator at a specific size, and either side of that band, the math broke.

If a franchise rep will not sit at the table with you and walk through this projection openly, that is a tell. They have run the math. They know what it looks like at scale. If they will not show you, ask yourself why.

Question 2: Test support before you need it

The article quotes me saying that what looks vague before you sign stays vague after. I want to expand on that.

Here is the test. Pick three real operational questions you have right now. Make one technical, one marketing, and one back-office. Send those three questions to whoever the franchise tells you their support team is. Time the responses. Read the responses carefully. Then ask a follow-up that requires actual specificity, not a generic answer.

The pre-signing experience is the best support experience you are ever going to get. They are courting you. If the responses are slow, generic, or scripted now, they will be slow, generic, or scripted at 2pm on a Saturday in June when you have a crew stuck on a job and need an answer in twenty minutes.

When I evaluated the franchise I joined, I did not run this test. I assumed the support tier matched the marketing tier. It did not. By the time I learned the difference, I had already paid for a year of services I was not really receiving.

If you are looking at a franchise today, do the test. Send the three questions. Time the responses. Make the decision with that data in hand.

Question 3: Read the territory and the exit before the brand

Trent Cotney makes the legal point in the Roofing Contractor article and I will not try to reproduce his expertise. Hire a franchise attorney. I mean that. Not a general business attorney. A franchise attorney. They will read the Franchise Disclosure Document differently than your contracts lawyer will, and the FDD is the document that controls your life for the term of the agreement.

The FTC rule, as Cotney notes, is that the franchisor must give you the FDD at least 14 calendar days before you sign. Use those 14 days. Do not skim. The clauses I now know to read first are not the ones I focused on the first time around.

In rough order of "wish I had read this twice":

  1. Protected territory. What is the radius. What is the population coverage. What carve-outs exist. Can the franchisor sell additional units inside your territory under different brands they own.
  2. Term and renewal. How long is the initial term. What does renewal require. Who decides if it renews.
  3. Early termination. What does it cost to leave early. What triggers default on the franchisor's side and what are your remedies if they default.
  4. Non-compete and non-solicit. Both for customers and for employees. How long after exit. What geographic radius. What carveouts.
  5. Customer data ownership. Who owns the contact information for the customers you sold and serviced.
  6. Branding restrictions post-exit. How long are you restricted from re-branding. What is the de-identification process.
  7. Approved vendor lists. Are you required to buy materials, technology, or services from named providers. What are the markups built into those required relationships.

You can survive a bad clause in any one of these areas. You cannot survive a bad clause in three or four of them simultaneously, which is the situation a lot of franchise operators discover only when they try to leave.

Question 4: Are you training the system, or learning from it

This is the question I had not even formed the words for when I signed. The Roofing Contractor article puts it this way: watch what happens to the work you are doing. I will sharpen it.

A good franchise system has a feedback loop. When an operator in Tampa figures out a better way to handle insurance supplements, that improvement flows back into the system, gets vetted, and then gets distributed to operators in Charlotte, Denver, and Phoenix. The system gets smarter because operators are smart and the system is built to learn.

A bad franchise system has a one-way pipe. The franchisor pushes process down to operators. Nothing flows back up. The operators who figure things out either keep their innovations to themselves as competitive advantage against other operators in the network, or they share generously and never see those improvements adopted at the platform level. Either way, the operator's intelligence gets stranded.

Test for this before you sign. Ask the franchisor: "Can you point me to three operational improvements your platform has shipped in the last twelve months that originated from operator feedback. Walk me through how that feedback loop works." If the answer is vague, or if the three examples are clearly marketing material rather than operational, you have your answer.

When I started designing the Capital City Roofing Licensing Platform, this was one of the first architectural decisions I made. Licensee feedback is a first-class input into the operating system, not an afterthought. The same standardized workflows, the same AI tech stack, the same back-office support layer that licensees inherit, those evolve based on what licensees discover in their markets. The platform learns. That has to be a deliberate design choice, because the default in this industry is the one-way pipe.

I have written more about why standardization has to come before AI in Best Choice Roofing Just Validated What We Built From Day One and about why operating systems beat heroics in The Mental Model Shift From Operator to Architect. Both posts are connected to this fourth question.

Question 5: When does the franchisor actually lose money

This is the test I now apply to every partnership I evaluate, not just franchises. Sales partnerships, technology partnerships, joint ventures, all of it.

Ask: when does the other side lose money in this deal.

If the answer is "when you lose money," your incentives are aligned.

If the answer is "when you exit," and only when you exit, your incentives are not aligned. The franchisor's revenue depends on you staying, not on you succeeding. Those are different things, and over a long enough time horizon, they diverge.

A lot of franchise economics quietly resolve to "we make money whether the operator thrives or struggles, as long as the operator does not leave." That is a tolerable structure for a year or two. It is not a structure I would build a career on.

The Roofing Contractor article gets at this in the fifth question. Read the franchisor's economics. Look at where their margin actually comes from. Royalties, required-vendor markups, technology fees, mandatory marketing contributions. Then ask yourself which of those revenue streams gets bigger when you grow, and which of those revenue streams gets bigger regardless of whether you grow. The ratio tells you the answer.

What I built instead

When I exited the franchise, I had a list. The list was every structural element I would build differently if I ever stood up a multi-operator platform of my own.

A few years later, I did. The Capital City Roofing Licensing Platform is the inverse of the franchise model on every dimension that matters.

Where franchise royalties scale uncapped against operator success, licensing royalties are structured so the math works at every revenue tier an operator might realistically hit.

Where franchise support is often a marketing promise, licensing support is built into the operating system the licensee runs on every day. The licensee's CRM, project management, dispatch, and follow-up layer is BuilderLync, the AI-driven platform my co-founder and I built specifically for contractors. Support is not a phone number. It is the system itself.

Where franchise contracts lock operators into multi-year terms with painful exits, the licensing platform runs on short renewable terms. If a licensee wants out, they leave. The platform earns its renewal each year by being worth more to the licensee than it costs.

Where franchise systems often have one-way feedback pipes, the licensing platform is designed so operator innovations flow back into the platform's standard operating procedures, training curriculum, and tech stack. Capital City University, our internal training program, gets updated based on what licensees learn in their markets.

Where franchise incentives often resolve to "we win when you stay," licensing incentives resolve to "we win when you grow." That is a different deal, and it shapes everything from how we onboard a new licensee to how we structure the long-term relationship.

I am not going to publish pricing or contract terms here. If you want to have that conversation, the entry point is licensing@capitalcityroofing.net. I read every one of those emails personally.

A companion piece on the company blog

The Capital City Roofing team published a companion piece on the company blog explaining the structural design choices behind the licensing platform from the company's side: Why We Built Capital City Licensing Instead of Becoming a Franchise. If this post is the operator's-side, first-person story, that one is the company's-side, design-decision write-up. They are intended to be read together.

Where to go from here

If you are looking at a franchise opportunity right now, run the five questions. Run the royalty math at every revenue tier. Test the support before you need it. Read the FDD with a franchise attorney. Press on the feedback loop. Look at where the franchisor actually makes money.

If you decide a franchise is the right structure for you, sign with your eyes open. There are good operators inside good franchise systems. The point of due diligence is to know which one you are walking into.

If you decide the franchise model does not fit, the Capital City Roofing Licensing Platform is one alternative worth looking at. There are others. Whichever direction you go, the questions in the Roofing Contractor article are the right questions to ask first.

Keep Exploring

Related reads on operating systems, scaling discipline, and the structural choices that separate platforms that work from platforms that fail:

About Brad Strawbridge

Brad Strawbridge is the Founder and CEO of Capital City Roofing, a GAF Master Elite, GAF Commercial Certified, and CertainTeed ShingleMaster Premier roofing company serving Greater Atlanta and Nashville. He is also Co-Founder and Chief Strategy Officer of BuilderLync, an AI-driven CRM and project management platform built for contractors. Brad is an active member of RT3 (Roofing Technology Think Tank), NRCA, and The Roofing Alliance.

bradstrawbridge.com | LinkedIn | capitalcityroofing.net

Tags: roofing franchise due diligence, franchise disclosure document, FDD, franchise alternatives, roofing licensing platform, Capital City Roofing licensing, BuilderLync, contractor operations, operator to architect, Brad Strawbridge, Roofing Contractor magazine, Trent Cotney, franchise contract review, royalty structure