Caution is the by-word in considering the acquisition of a franchisor, since any such deal gets the buyer a unique distribution system consisting of scores, perhaps hundreds, of franchisees who will prove key to the success of the deal. Anyone that buys a franchising company also “buys” its relationships with its franchisees, a blend of both formal agreements and informal practice. Hence, a buyer’s due diligence must explore these relationships in depth to understand just how the franchisor operates and anticipate trouble before it happens.
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