Due Diligence Checklist

Obtained and read the complete FDD

Franchisors must provide this at least 14 days before signing.

Reviewed Item 1 — The Franchisor (business background, history)

Reviewed Item 2 — Business Experience of key people

Reviewed Item 3 — Litigation history

Reviewed Item 4 — Bankruptcy history

Reviewed Item 5 — Initial fees (franchise fee, training fees)

Reviewed Item 6 — Other fees (royalties, marketing, technology)

Reviewed Item 7 — Estimated initial investment range

Reviewed Item 8 — Sourcing restrictions (approved suppliers)

Reviewed Item 11 — Franchisor's obligations (what they provide)

Reviewed Item 12 — Territory rights and exclusivity

Reviewed Item 17 — Renewal, termination, and transfer terms

Reviewed Item 19 — Financial performance representations (if provided)

Reviewed Item 20 — List of current and former franchisees

Reviewed Item 21 — Financial statements of the franchisor

Reviewed the franchise agreement (Item 22) in full

Calculated total startup costs (including working capital)

Verified sufficient personal net worth and liquid capital

Explored financing options (bank loans, SBA, franchisor financing)

Prepared a detailed business plan with financial projections

Use our Business Plan Template tool.

Calculated estimated break-even timeline

Use our ROI Calculator tool.

Accounted for personal living expenses during ramp-up period

Understood all ongoing fees (royalties, marketing fund, technology fees)

Reviewed the franchisor's financial statements for stability

Discussed tax implications with an accountant

Planned for adequate insurance coverage

Hired a franchise-experienced attorney

Attorney reviewed the FDD and franchise agreement

Understand territory rights and any restrictions

Understand renewal conditions and costs

Understand termination clauses and your rights

Understand transfer/resale rights and restrictions

Reviewed non-compete clauses (during and after agreement)

Reviewed dispute resolution process (mediation, arbitration)

Checked provincial franchise disclosure laws that apply

Contacted at least 5 current franchisees from Item 20 list

Asked about actual revenue vs. franchisor projections

Asked about quality of franchisor support and training

Asked about the biggest challenges they've faced

Asked if they would invest in this franchise again

Contacted former franchisees to understand why they left

Visited existing franchise locations in person

Spoke with employees at existing locations

Understand the daily time commitment required

Reviewed training program details (duration, location, cost)

Understand technology systems and POS requirements

Reviewed staffing requirements and hiring expectations

Understand supply chain and approved vendor requirements

Reviewed the operations manual (or been briefed on contents)

Understand marketing requirements (local and national)

Understand reporting requirements to the franchisor

Researched local market demographics and demand

Identified potential locations (if applicable)

Analyzed local competition and market saturation

Verified zoning and permit requirements

Understand the franchisor's site selection process and criteria

Evaluated lease terms or real estate purchase costs

Assessed foot traffic and visibility of potential locations