The franchise business is all about brands and franchisees,

and the two concerns interact. The brand is promoted to

attract quality franchisees, and then the franchisees are

supported to promote the brand. Successful franchisees are

critical to the success of any franchise system, so a potential

buyer must focus its due diligence on the financial and legal

health of both franchisor and franchisees, because a system

that is inherently unprofitable for franchisees will likely be

a bust for the franchisor.

What does it take to do the right kind of due diligence

when buying a franchisor? Where can trouble crop up? And

how can one leave room to structure the final terms of the

deal to fit the reality uncovered?