1851

<a href="https://1851franchise.com/what-is-an-fdd-2705192">Franchise Disclosure Documents</a>, market analysis, franchisee interviews and <a href="https://1851franchise.com/2020s-top-franchise-legal-players-2713623">legal interpretations</a> are just a few ways that a prospective franchisee can familiarize themselves with a prospective brand to invest in. A comprehensive understanding is a necessity when it comes to investing a lot of money, and a defined strategy can help get a franchise unit up and running successfully.Here are 10 tips from 1851 on how to perform this essential due diligence — and ensure that a franchise is operating to its fullest potential upon opening.<h4>Define Your Target Audience</h4>It is a burdensome task to enter into franchising without tailoring franchise goals to a specific market. A target audience can be a wide range of people or a specified demographic, but <a href="https://thefranatics.com/blog/how-to-identify-your-target-market-as-a-franchisee?utm_source=1851franchise.com&utm_medium=article&utm_campaign=10-tips-for-performing-franchise-due-diligence-2717520" target="_blank" rel="nofollow">finding a way to curate</a> a product or service to this specified range of people can ensure that all business operations follow a similar end goal. Marketing strategy, product development and employee training can all be guided by having a set perception of the consumer in mind — saving precious time in the early stages of a franchise.<h4>Follow an Adaptive Model</h4>COVID-19 showed the entire world a lesson in learning how to adapt. It’s in the best interest of franchises everywhere to have certain plans in place for issues that arise, and while a backup plan isn’t an ideal scenario for a franchise startup, it’s perhaps more essential than ever. After so many business interruptions, it’s best to have at least <a href="https://www.qsrmagazine.com/outside-insights/how-adapt-your-franchise-model-post-covid-world?utm_source=1851franchise.com&utm_medium=article&utm_campaign=10-tips-for-performing-franchise-due-diligence-2717520" target="_blank" rel="nofollow">some degree</a> of a contingency plan in place.<h4>Analyze the Market</h4>A comprehensive <a href="https://www.pointfranchise.co.uk/articles/franchise-market-research-2471/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=10-tips-for-performing-franchise-due-diligence-2717520" target="_blank" rel="nofollow">market analysis</a> is a necessity when it comes to a franchise performing its due diligence. Defining a target audience is perhaps just as important as knowing the markets in which a brand can be successful in, and it’s no easy task to pick up an entire franchise and move after it’s already been established. This is big news for franchises that are in a developmental stage, but even more established brands can look to gear their services toward the kind of people who see it the most.<h4>Find the Actual Investment Costs</h4>Initial investment figures for any brand are laid out in a Franchise Disclosure Document for all to see — and while it can be challenging to sort through page after page of disclosures, this information can be the most essential in formulating a business plan and keeping it running. Legal documentation is far more binding than simple word-of-mouth, and a thorough analysis of an FDD can ensure a franchisee and franchisor know their financial obligations.<h4>Know What You Own</h4>While a franchisee can look at their unit as an individualized investment, a franchisor might often look at that same unit as an extension of its corporate outreach. This is also mapped out in the FDD, and franchise owners should be readily aware of the royalties and associated fees from being related to a franchised entity (and <a href="https://www.franchiselawsolutions.com/buy-a-franchise/negotiating-franchise-royalty-fees/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=10-tips-for-performing-franchise-due-diligence-2717520" target="_blank" rel="nofollow">what it means to navigate them</a>). Some brands will allow their franchises an ability to operate on a far more individual basis than others, and the support and associated royalties for a franchise unit can be a good place to recognize these details.<h4>Check Out the Fine Print</h4>Analyzing every single facet of a FDD can be extremely mundane and difficult to interpret, but knowing the essential details in the document can be paramount in getting a franchise up and running. There are countless items, sections, investment figures and support strategies that exist within an FDD, and even just a committed 30 minutes can give a prospective franchisee all sorts of insights on how to operate a successful, independent business.<h4>Envision the Future</h4>Expansion isn’t always on the minds of all franchise brands, but continued growth is something that can ensure a brand has a continued, sustained operation. Looking ahead to where a brand can go is a huge component toward the due diligence process, as it’s important to understand how a brand is regarded and how it can continue to progress over time.<h4>Learn About a Reputation</h4>Potential issues about a franchise brand, like units closing, are clearly marked in an FDD. This analysis can lead a prospective investor away from a certain brand and in favor of others, and finding this information does not require tracking down some potentially hard-to-find leads. It’s best to work with brands that have a formidable explanation for these details, and acknowledging any potential non-disclosure or non-compete details up front is just the first step toward getting familiar with a reputable or not-so-reputable brand.<h4>Look at Any Lawsuits</h4>In the event that any serious legal action takes place, there are legal reports available to track down where a franchise brand may have encountered some troubles. An ideal brand to invest in is one with a clean legal reputation, but a worthy consideration is at least taking a look to ensure the wheels haven’t fallen completely off for a previous franchise owner. If a lawsuit is big, it will likely be publicized heavily, and it shouldn’t be hard to avoid through some online analysis.<h4>Work With the Support You Receive</h4>All franchisors will provide support in some manner to the franchises they oversee. The extent of support will also be covered in a FDD, but the thorough nature of this support can be best reflected through a team of existing franchise owners that work with it every day. It’s best for a franchise owner to take advantage of as much available support as possible, and while a franchise unit mission can often be to become self-sufficient, it’s important to be familiar with a team in place that is geared to keep business moving.

Franchise Due Diligence Tips | 1851 Franchise

1851 Franchise

The roles of franchisee and franchisor are often clearly defined. Here are the diligent strategies to base those definitions on before an agreement is signed.

10 Tips for Performing Franchise Due Diligence

10-tips-for-performing-franchise-due-diligence

Fresh Coat

Photo of Fresh Coat vehicle with ladders on top

The Rise of Home Improvement Franchises: Why Now Is the Time to Invest

why-invest-home-improvement-franchise-fresh-coat

HomeTeam Inspection Service

Photo of HomeTeam inspector in red polo and khaki pants, walking by branded vehicle

Real Estate Today: Behind the Drywall: The Truth About Home Inspections

purpose-of-home-inspection

Dog Training Elite

Dog Training Elite Franchise - DTE - National Service Dog Month - 1851 Franchise

Celebrating Service Dogs: Why Proper Training Changes Lives — And How Dog Training Elite Is Leading the Way

dog-training-elite-national-service-dog-month

Senior Care Authority

How This Senior Care Authority Franchisee Turned Love for His Grandparents Into a Lifelong Calling

how-this-senior-care-authority-franchisee-turned-love-for-his-grandparents-into-a-lifelong-calling

Hometown News: Like Father, Like Son — Family-Run Inspection Business Blends Generations of Expertise and a Keen Eye for Detail

father-son-home-inspection-franchise-florida

Buying a Franchise Masterclass

 Franchise Opportunities

Get Support Buying a Franchise

How to Buy a Franchise White Paper

How to Buy a Franchise

How to Sell Franchises

How to Grow a Franchise

Find a Franchise Supplier

1851 Franchise Opportunities

Franchisor News

Franchisor Power Rankings

FranCamp Mastermind Summit

Franchise Development Website Builder

Franchise Resources

What ALEC-Laffer's Report Means for Franchising

Website Awards

Power Rankings

About 1851

Advertise on 1851

Contact 1851 Editorial

Terms of Use

1851 Login

GROWTH CLUB LOGIN

facebook

instagram

twitter

linkedin

youtube

Design with American and Federal Reserve flags against light blue background

Federal Reserve Expected To Cut Rates by Quarter Point, a Move That Could Boost Franchise Growth

fed-rate-cut-boosts-franchise-growth

Potbelly to be Acquired by RaceTrac in $566 Million Deal 

racetrac-acquires-potbelly-in-566-million-deal

Health Care Hiring Slowdown Highlights In-Home Care Franchise Opportunities - 1851 Franchise Agg

Health Care Hiring Slowdown Highlights In-Home Care Franchise Opportunities 

health-care-hiring-slowdown-in-home-care-franchise-opportunities

Caribou Coffee Names Scott Kennedy CEO, Eyes Continued Growth

caribou-coffee-names-scott-kennedy-ceo-eyes-continued-growth

McDonald’s Launches New Extra Value Meals as Consumer Demand for Value Continues to Climb

mcdonalds-launches-extra-value-meals

Technomic Releases Annual Ranking of the Top 15 Fast-Food Chains in the U.S.

technomic-releases-annual-ranking-of-the-top-15-fast-food-chains-in-the-us

Friendly’s Parent Company Acquired by Multi-Unit Franchisee as More Owners Take the Lead in Brand Acquisitions 

friendlys-parent-company-acquired-by-multi-unit-franchisee-as-more-owners-take-the-lead-in-brand-acquisitions

Hely and Hiral Patel Bring Their Longtime Dream to Life With The Brass Tap

brass-tap-franchise-pasadena-maryland-hely-hiral-patel

1851 Keyword - The Secret To Succeeding With a Part-Time Franchise Is Picking the Right Model

The Secret To Succeeding With a Part-Time Franchise Is Picking the Right Model

part-time-franchises-picking-the-right-model

Franchisee spotlight graphic with photo of Ricki Oberoi and Layne's Chicken Fingers logo

10 Tips for Performing Franchise Due Diligence

MORE STORIES LIKE THIS