Buying a franchise without due diligence

Buying a franchise and due diligence

You have written that a high percentage of people buying a franchise do not obtain professional advice before making the purchase. Why is that?

Buying a franchise and due diligence should go hand in hand

Intellectually, one would assume that all buyers want the best in research before purchasing. But, from a practical point of view, maybe not. Most prospective, first time, franchisees are not experienced business people at all. They are venturing into entrepreneurship and they are scared; naturally so. Franchise brokers (unfortunately now termed franchise consultants who don’t charge a fee upfront, but are paid a commission if a client buys a franchise they represent) have a very powerful hold on buyers from the perspectives of sales experience and knowledge. Sadly, being emotionally sold on a franchise generally trumps legitimate due diligence and that is why such a small percentage of buyers participate. We have conducted best practice surveys among franchise owners where nine of 10 never read or understood what they purchased.

Also, it seems to be human nature to take the path of least resistance. So, buying a franchise without due diligence, especially professional/expert due diligence, is understandable in that regard. The mind sometimes does not blend with reality and buying a franchise can fit into that realm.  See this article on buying a franchise.