Focus on these three (3) areas for your Franchise Due Diligence Checklist:
1-The Franchise Business
2-Your Partners
3-Your Role
Who is going to manage the day to day operations of the franchise business?
What are the key drivers of financial and operational success? In particular, how will it make money and who are the target customers?
What are the key risks for your franchise? Above all, are all parties open to advice, feedback and criticism?
How reasonable are the franchisor’s growth projections and what has been the franchisor’s financial and operational experience to date?
Have you made enough validation calls as part of your Franchise Due Diligence Checklist? We recommend a minimum of 4 calls to other franchisees.
Do your partners share your professional ethics? In other words, are you on the same page?
What are the holes on the franchisor’s team and your team? Are there are conflicts of interest?
Does everyone have meaningful have skin in the game? In other words, are all parties incentives aligned?
Are you comfortable with the franchisor team as well as your team? Are conversations based on fact, not emotion?
Does the company set specific objectives in regard to your role, as a result, do you feel your input is valued?
SUMMARY
Once you complete the due diligence process, you should be ready to make a final decision. Will you go forward with the franchise investment? If you’re not quite sure, you may need a second opinion, it may be helpful to consult with family, friends, a trusted business colleague or a experienced franchise consultant.
Always bear in mind, this is a process and you will learn as you go. After all, you don’t have a crystal ball, you will need to trust your due diligence.
To explore the Franchise Due Diligence Checklist process further, please schedule a no obligation consultation: