Due Diligence – The Franchise Buyer’s Best But Least Considered Friend

Under federal law all franchisors must supply prospective franchisees with full disclosure of certain information which, in theory, allows for critical analysis of a given business opportunity. However, for a variety of reasons buyers do not take advantage of that which is disclosed to them, and consequently, most franchisees never understand the nature of the business until long after they buy into a particular franchise.

In addition, even if the documents are difficult to deal with for the novice investor, there exist numerous options (lawyers and franchise consultants) that can assist with critical due diligence, but even this resources are poorly used and rarely engaged.

In franchising, as with life in general, facts are available for consideration and better decision making, but for some reason we are loathe to take advantage of the tools and information available for study.

If you are thinking about acquiring a franchise take the time to complete critical due diligence or hire a knowledgeable person to assist in the process.