Franchise Glossary
Due Diligence
What is Due Diligence in franchising?
The structured investigation a prospective franchisee conducts before signing any agreement: reading the FDD, calling existing franchisees from Item 20, reviewing Item 19 financial data, confirming territory availability, retaining a franchise attorney, and lining up financing. Thorough due diligence is the primary difference between franchise buyers who go in with realistic expectations and those who discover problems after they have signed. The process typically takes four to eight weeks when done properly.