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‘Franchise due diligence‘ is, by far, the most important element in deciding upon the purchase of any franchise opportunity. However, it is shocking to learn that most buyers never complete any type of serious analysis before making a decision to purchase. I honestly don’t know if the franchisee mindset is more fixed on “looking under the rocks’ for fear of finding reasons ‘not to buy’, or whether it is just too awesome a task to undertake.
Now, a variety of due diligence services are available, and they are rather easily found with an easy Internet search, but only after the purchase, do most franchisees find out the truth (the good and the bad) concerning their business opportunity of choice. Having sat in my fair share of ‘franchise best practice’ sessions with existing franchisees, I can say with confidence that you will rarely find 50% with a reasonable understanding of the contract they signed.
And, let me add that due diligence should not simply be concerned with the franchise offering, it is perhaps even more important to consider whether or not the buyer stands a fair chance of ‘fitting well’ within a given franchise. I consider the issue of potential ‘good fit’ with a business as the critical ‘first step’ in deciding on a franchise purchase. The “Focus Program for Emerging Entrepreneurs” was designed specifically to accomplish ‘personal due diligence’ prior to ‘business due diligence’.