Franchising

The due diligence gap: Five questions every franchise buyer should be asking

Photo: Adobe Stock

March 27, 2026 by Amanda Duplantis — President, FranNet

Summarize with

Buying a franchise is often described as "being in business for yourself, but not by yourself." It's an exciting prospect, trading the corporate ladder for an equity-building asset with a proven roadmap. However, in the excitement of exploring polished websites, elaborate brand presentations and captivating videos, many prospective buyers fall into a common trap: they only ask surface-level questions and overlook deeper indicators that reveal the health of a franchise system.

To protect your investment, buyers must peel back the layers of the Franchise Disclosure Document (FDD) and challenge the sales pitch.

True due diligence requires moving beyond the highlight reel. The following five areas are where buyers consistently miss the mark and the questions that reveal the full picture.

Unit economics: Looking beyond the averages

Item 19 of the FDD (Financial Performance Representations) is where franchisors disclose how units perform. However, not all Item 19s are created equal. Many provide averages, which can be skewed by a handful of top-performing legacy units.

Looking only at the average presents a best-case scenario that may not apply to a new franchisee starting from scratch. Serious buyers examine the distribution of success and the reality of the ramp-up period.

Questions to ask:
● "What is the typical break-even point in months, and what working capital do underperforming owners say they wish they had going in?"
● "What percentage of franchisees actually hit or exceed the average numbers listed in Item 19, and how long does it typically take them to get there?"

System health: Uncovering churn

A franchise system might boast about opening 50 new units last year, which sounds like explosive growth. But if they also closed 40 units, net growth is minimal, and the system may have underlying issues. Growth statistics can mask churn, the rate at which franchisees leave the system.

It's important to distinguish between healthy turnover (retiring franchisees selling successful units at a profit) and unhealthy turnover (locations closing down or selling at a loss).

Questions to ask:
● "Over the last three years, how many units were transferred or sold, and how many ceased operations entirely? Why?"
● "How many disputes, arbitrations, or lawsuits have occurred with franchisees in the past five years?"

Real support vs. sales talk

Every franchisor will tell you they treat their franchisees like family. They will promise comprehensive training and ongoing support. But "support" is a vague term. In a sales context, it's a feeling; in a business context, it must be measurable..

Buyers must determine whether the franchisor has the infrastructure to support operators through challenges or whether its team is primarily focused on selling new franchises.

Questions to ask:
● "What is the ratio of field support staff to open units, and how often will I realistically interact with them?"
● "What specific Key Performance Indicators (KPIs) does your field team track with franchisees monthly?"

The daily reality: Role fit

It is easy to fall in love with a product or a brand, but that doesn't mean you will enjoy the daily activities required to sell it. Many buyers fail to distinguish between the role of an owner-operator and the role of a manager for the specific model. You might love health and wellness, but if you buy a fitness franchise that requires constant sales and member acquisition and you hate selling, you will likely struggle regardless of brand strength.

Questions to ask:
● "How do you actually spend your time in a typical week — what is the split between sales, operations, hiring, and administration?"
● "What are the two to three activities that directly drive revenue in this business, and which ones do you personally handle versus delegate?"

The competitive moat: Future-proofing

You are not just buying a business for today; you are buying it for five or ten years from now. A concept might be trendy, but does it have a competitive moat, a unique advantage that protects it from competitors and market shifts? Buyers should assess whether the franchisor is innovating or relying on past momentum.

Questions to ask:
● "In what specific ways are you meaningfully better than local independents and other franchises, and how do you prove that to customers?"
● "What would have to change in the market (labor costs, technology, regulation) for this model to struggle, and how are you planning for those contingencies?"

Empowering your decision

Asking these tough questions isn't about being difficult; it's about being a smart investor. A high-quality franchisor will appreciate your thoroughness because they want partners who understand the reality of the business.

Navigating this due diligence process can feel daunting, but you don't have to do it alone by leaning on established franchisees, franchise consultants, and other people in the industry. By digging deeper, you can make a decision based on facts, giving you the confidence to transition into business ownership with your eyes wide open.

About Amanda Duplantis

Amanda brings a systems-level perspective to franchising, blending operational rigor with forward-looking strategy. She is particularly skilled at identifying opportunities, piloting solutions, and scaling what works across complex networks. Known for steady leadership in moments of change, she builds structure where it is needed and momentum where it matters most. As President, Amanda partners closely with FranNet’s franchise owners, internal leadership team, Board of Directors to modernize the organization and reinforce its position as a trusted authority in franchise consulting.

Connect with Amanda: