1851

Before signing on the dotted line with a franchise, it is imperative to do the proper <a href="https://1851franchise.com/how-to-perform-due-diligence-on-a-brand-that-doesnt-have-franchisees-2375">due diligence</a>, which means conducting the research required to get a full understanding of the brand and the franchise requirements.The first step should be carefully reading the <a href="https://1851franchise.com/10-must-ask-questions-about-franchise-agreements-2708306">franchise agreement</a> in its entirety to ensure you know what you would be getting into. Assessing the initial investment and financial obligations and comparing those to your personal financial liability and resources is also an integral part of the due diligence process.&nbsp;In terms of reading the FDD, it’s important to review and understand the unit economics of the franchise — <a href="https://1851franchise.com/how-to-read-an-item-19-3200">Item 19</a>. Also, make sure to really dig into the costs that will be associated with joining the brand — <a href="https://1851franchise.com/the-most-important-items-in-an-fdd-item-7-initial-costs-2712071">Item 7</a>. Check out data relating to franchise growth in <a href="https://1851franchise.com/the-most-important-items-in-an-fdd-item-20---outlet-transfer-and-franchise-owner-information-2712074">Item 20</a> to gauge the scalability of the business, and ask questions if there is any litigation listed in <a href="https://1851franchise.com/understanding-item-3-of-the-franchise-disclosure-document-litigation-history-2703061">Item 3</a> of the FDD.Next, speak to at least 10 established franchisees for <a href="https://1851franchise.com/what-is-the-value-of-franchisee-validation-in-the-franchise-sales-process-2703208">validation</a> — franchisors might have a list of recommended franchisees to speak to, but break out of the habit of only contacting these individuals to ensure you get the real scoop.If possible, meet the <a href="https://1851franchise.com/the-importance-of-a-strong-leadership-team-972">leadership team</a> and learn about the company’s vision and business philosophy. Whether it is during a <a href="https://1851franchise.com/how-to-make-the-most-of-a-franchise-discovery-day-2714732">discovery day</a> or separate phone call, try to find out where the brand and industry are going and how they plan on staying relevant. You also want to look for a brand that has the capital to continue supporting the franchise system, and reading the footnotes of the company’s audited financial statement is where you will get that insight.Throughout all of these steps, especially when it comes to reviewing complex documents like the FDD and franchise agreement, make sure to seek out the help of a qualified <a href="https://1851franchise.com/franchisebrokerawards">franchise broker</a> or <a href="https://1851franchise.com/2020s-top-franchise-legal-players-2713623">franchise attorney</a>. When contemplating buying into a franchise system, franchise professionals can be an essential resource as they are experts in the industry and know the ins and outs of evaluating a franchise.

How Do You Do Due Diligence on a Franchise?

1851 Franchise

Performing due diligence on a franchise opportunity includes looking over the Franchise Disclosure Document, talking to advisors, meeting the leadership team, seeking franchisee validation and more.

how-do-you-do-due-diligence-on-a-franchise

Children's Lighthouse

Why Franchisees Are Buying — and Expanding — with Children’s Lighthouse

why-franchisees-are-buying-and-expanding-with-childrens-lighthouse

Mosquito Squad

image of a mosquito squad franchisee visiting a site for bidding

Why More Families Are Saying Goodbye to Mosquitoes — and Hello to Mosquito Squad Plus

mosquito-squad-pest-control-consumer-benefits

image of mosquito squad franchise team in front of a nice home

Built To Outsmart the Buzz: Why Mosquito Squad Plus Is the Franchise Opportunity Pest Control Entrepreneurs Have Been Waiting For

mosquito-squad-franchise-opportunity

KidStrong Franchising, LLC

Why This Orangetheory Fitness Franchise Owner Decided To Invest in KidStrong

why-this-orangetheory-fitness-franchise-owner-decided-to-invest-in-kidstrong

Building Stronger Futures: How KidStrong’s Atlanta Footprint Is Sparking Transformational Growth

building-stronger-futures-how-kidstrongs-atlanta-footprint-is-sparking-transformational-growth

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

McDonald’s Rolls Out Major Value Push To Win Back Customers Amid Inflation

mcdonalds-rolls-out-major-value-push-to-win-back-customers-amid-inflation

Photo of Paris Baguette pastries and beverages 

Paris Baguette Celebrates 250th Café Opening in Frederick, Maryland, Accelerating Expansion and Reviving the Neighborhood Bakery Café

paris-baguette-250th-north-america-cafe

Restaurant Chains Open Their Wallets To Jump-Start Franchise Growth - 1851 Franchise

Restaurant Chains Open Their Wallets To Jump-Start Franchise Growth

restaurant-franchise-incentives-cash-royalty-holidays-fee-reductions

U.S. Budget Deficit Rises as Tariff Revenues Increase — Potential Considerations for Franchising

us-budget-deficit-rises-as-tariff-revenues-increase-potential-considerations-for-franchising

Dickey's Franchisee Backlash - Lawsuits - Disputes - 1851 Franchise

Texas-Based Dickey’s Barbecue Pit Grapples with Franchisee Backlash

dickeys-barbecue-pit-franchisee-lawsuits

Hooters Leans Into Franchising With Closure of 30 Company-Owned Stores - Agg - 1851 Franchise

Hooters Leans Into Franchising With Closure of 30 Company-Owned Stores

hooters-franchise-model-company-owned-closures

Rising Jobless Claims Could Signal Challenges — and Opportunities — for Franchising

rising-jobless-claims-affect-franchising

Wendy's CEO Kirk Tanner Steps Down - Breaking News - 1851 Franchise

Wendy’s CEO Kirk Tanner Steps Down Amid Challenges, Leaving Franchisees Facing Uncertainty

wendys-ceo-transition-kirk-tanner-franchisee-uncertainty

"Come in, We're OPEN" sign against abstract background

Small Business Optimism Dips, Raising Concerns for Franchise Owners

small-business-optimism-dips-raising-concerns-for-franchise-owners

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

How Do You Do Due Diligence on a Franchise?

MORE STORIES LIKE THIS