Due Diligence – The Franchise Buyer’s Best but Least Considered Friend
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Most franchise consultants would agree that due diligence is a critical step in the process of buying a franchise, but unfortunately 'buyers' seem mostly obtuse to the obvious.
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.
In addition, make sure to read these articles:
- OC 50: Profiles of Orange County's Most Influential Businesspeople
- Real Estate: The Realtor Advantage.
- Origins of Promissory Estoppel: Justifiable Reliance and Commercial...
- Comparative fault in legal malpractice and insurance bad faith: An...
- "Skip" sack and Applebee's: how Pub Ventures went public.
- 2004 BUYER'S Guide
Latest Comments
You would think that with all of the information and guidance being provided via the internet, prospective franchisees would get this and understand the importance of thoroughly reading a company?s UFOC and analyzing a company?s audited financial statements. I mean after all, investing into a franchise could be the second biggest (if not the biggest) investment of one?s life. Granted, sometimes anywhere from three to as many as ten companies may need to be considered before deciding on the right one, which of course requires a lot of time for vetting. However, this is where a good Franchise Consultant can help by outlining an organize procedure and by providing resources to streamline and expedite the process of vetting for their clients.
Comment By: Lafate Smith | 4/16/08 at 3:12 PM Due Diligence – The Franchise Buyer’s Best but Least Considered FriendRelated Resources
