Franchise Due Diligence Checklist: How to Research Any Franchise (2026)

Franchise due diligence is the work you do between "this looks promising" and signing an agreement that may run for a decade. Most buyers know they should do it. Fewer know what "done" looks like. This franchise due diligence checklist is designed to be printed, worked through brand by brand and ticked off, whether you are looking at a café, a gym, a cleaning business or a tutoring franchise.

It is organised by subject rather than by step, so you can hand sections to your lawyer and accountant and keep the rest yourself. If you want the order of events from first enquiry to opening day, read our guide on how to buy a franchise alongside this one. We are a tutoring franchisor, so read our view with that in mind. The checklist is the one we would want any buyer to use on us, and on every other brand on their list.

How to use this franchise due diligence checklist

• Use one copy per brand, so vague answers stand out side by side.
• Record the source for every tick: a page in the disclosure document, a clause, an email or the franchisee who told you. "The franchisor told me" is a lead, not a finding.
• Unanswered items become the agenda for your next meeting and for your advisers.

1. The franchisor

You are entering a long relationship with a company. Research it the way a lender would.

• History. When was the business founded, when did it start franchising, and who owns it today? Has it changed hands or been through private equity investment recently?
• Track record of the system. How many units are open, how many opened and closed in each of the past three years, and how many changed hands? In the US this is Item 20 of the Franchise Disclosure Document (FDD), which covers outlet numbers, transfers and closures, according to the FTC's Franchise Rule Compliance Guide.
• Financial health. Read the franchisor's financial statements. US FDDs include audited statements in Item 21; Australian disclosure documents also include financial details or a solvency statement. Ask yourself whether the franchisor earns most of its money from royalties paid by operating franchisees or from selling new territories.
• Litigation and insolvency. Check litigation and bankruptcy history (Items 3 and 4 in a US FDD) and search court and corporate registers yourself. A few disputes in a large system are normal. A pattern of franchisees suing over the same issue is not.
• Leadership. Who runs the company and what is their track record?
• Associations. Is the franchisor a member of the local franchise association? Membership is a positive signal, not a guarantee.

2. The system you are buying

The brand is what customers see. The system is what you actually pay for.

• Training. How long is initial training, who delivers it, what extra costs apply (travel, accommodation) and what ongoing training exists for you and your staff?
• Operations manual. Ask to see at least the table of contents, and how often changes add costs.
• Technology. What software must you use, who owns the customer data, and what are the current and possible future technology fees? In July 2024 the FTC issued staff guidance warning US franchisors against charging fees that were not disclosed, citing rising technology and payment processing fees as examples franchisees had reported.
• Supply. Must you buy from nominated suppliers, and does the franchisor receive rebates from them?
• Support in practice. Who is your main contact after opening, and how many franchisees do they look after?
• Marketing fund. How is the levy spent, is it reported to franchisees, and how much reaches your area?

3. The numbers

This is the section most buyers rush. Slow down.

• Initial costs. Franchise fee, fit-out, equipment, lease deposit, legal fees, launch marketing and training travel. In the US, FDD Item 7 sets out the estimated initial investment.
• Ongoing costs. Royalties, marketing levy, technology, renewal and transfer fees, and mandatory refurbishment, as dollar amounts at three activity levels.
• Significant capital expenditure. In Australia, ACCC guidance on the 2025 Franchising Code notes new disclosure requirements from 1 November 2025, including how franchisors identify and disclose significant capital expenditure. Read that section carefully.
• Working capital. How many months of rent, wages, marketing and personal living costs can you cover before the business pays its way?
• Financial performance information. If the franchisor provides earnings data (Item 19 in a US FDD), check what period it covers, which units are included and which are excluded. If it provides none, ask why.
• Your own forecast. Build a monthly three-year forecast with an accountant who knows franchising, using your own rent quote, local wages and a conservative ramp-up, then test it on validation calls.
• Funding. Get indicative terms from at least two lenders.

For how these components fit together in education, see how much a tutoring franchise costs.

4. The territory and site

• Definition and carve-outs. How is the territory defined, is it exclusive, protected or neither, and can the franchisor sell online or through other channels inside it?
• Performance conditions. Can you lose the territory, or part of it, for missing targets?
• Demand. Use census data to count your target customers in the territory yourself. Do not rely only on the franchisor's figures.
• Competition. Walk the area and list competitors and their prices.
• Site. Who finds the site and signs the lease, and does the lease term match the franchise term?

5. The franchise agreement

Your lawyer should review this line by line. Your job is to understand the commercial effect of each clause.

• Term. How many years, starting from signing or opening?
• Renewal. Is renewal a right or at the franchisor's discretion? What fee applies, and will you have to sign the then-current agreement with different terms or refit the premises?
• Transfer. Can you sell, to whom, with what approval, and at what fee? Does the franchisor have a first right of refusal?
• Termination. On what grounds can either party end the agreement, what notice and chance to fix a breach is required, and what do you owe on exit? In the US, Item 17 of the FDD summarises renewal, termination, transfer and dispute resolution terms.
• Restraints. How long and how wide is any restraint of trade after the agreement ends? Could it stop you working in your own industry?
• Disputes and guarantees. Where are disputes resolved, and will you or your spouse personally guarantee the company's obligations?

6. Talking to existing and former franchisees

Validation calls are the most valuable hours in franchise due diligence. In the US, Item 20 of the FDD lists current franchisees and those who left the system during the last year; Australian disclosure documents also give details of current and former franchisees.

• Call at least eight to ten franchisees, not only the names the franchisor suggests. Include recent openers, long-standing owners and at least two people who have left.
• Ask about outcomes, not opinions: how long it took to cover their own wage, how the investment compared with the estimate, their weekly hours, what support they got in a crisis, and whether they would buy again.
• Ask former franchisees why they left and what they recovered on exit.
• Notice what people will not discuss. Under the FTC's July 2024 policy statement, US franchisors cannot use non-disparagement or confidentiality clauses to stop franchisees reporting possible law violations to the government. Reluctance to talk at all is still worth noting.

Our list of 25 questions to ask a tutoring franchisor covers the questions for the franchisor itself; adapt it for validation calls in any industry.

7. Professional advisers

• Franchise lawyer. Choose one who acts for franchisees regularly, not a generalist. Ask for a written summary of risks in the agreement and the lease.
• Accountant. Ask them to test your forecast, funding and tax structure, and to read the franchisor's financial statements.
• Lender, leasing adviser and insurance broker.

Many systems ask you to confirm in writing that you were told to get independent advice. Take it seriously.

8. Market-specific steps

The rules below are high level and change over time. Check the official source and get local legal advice.

Australia

• The Franchising Code of Conduct was remade with effect from 1 April 2025, with some rules applying from 1 November 2025, according to the ACCC. You must receive the disclosure document, the franchise agreement and a copy of the Code at least 14 days before you sign or make a non-refundable payment.
• The ACCC says you can end a new agreement in writing within a 14-day cooling-off period and may get some or all of your money back. From 1 November 2025, in limited situations, a franchisee can opt out of cooling-off in writing; think carefully before you do.
• Complete the ACCC's free online course, "Is franchising for me?", which the ACCC describes as six modules taking less than 90 minutes, and read the ACCC's guidance on what to do before you sign.
• Search the Franchise Disclosure Register (franchisedisclosure.gov.au), which franchisors have been required to join since late 2022.

United States

• The FTC Franchise Rule requires an FDD with 23 standard items at least 14 calendar days before you sign a binding agreement or pay any money.
• Several states, including California, Illinois, Maryland, Minnesota, New York, Virginia and Washington, require franchisors to register their FDD with a state regulator before selling there, and others require a notice filing. If you are in a registration state, check the brand's registration with the state regulator.
• Read the FTC's consumer guidance on buying a franchise before you meet any franchisor.

Canada

• There is no federal franchise statute. According to the Canadian Franchise Association, Saskatchewan's franchise disclosure law came into force on 30 June 2026, making it the seventh province with franchise legislation after British Columbia, Alberta, Manitoba, Ontario, New Brunswick and Prince Edward Island.
• In those provinces a disclosure document is generally due at least 14 days before you sign or pay. The CFA notes that under Saskatchewan's law a franchisee can rescind within 60 days if disclosure is late, or within two years if it is never provided; other provinces have similar remedies.
• In Quebec and the territories, general contract and civil law apply, so independent legal advice matters even more.

United Kingdom and New Zealand

• Neither has franchise-specific legislation. The British Franchise Association and the Franchise Association of New Zealand run member codes; FANZ says its Code of Practice and Ethics was revised in December 2024. Ask any franchisor, member or not, for written disclosure equivalent to the above.

9. Extra checks for a tutoring franchise

Education has its own risks. Add these lines if you are researching a tutoring franchise.

• Child safety. What screening is required for you and every tutor (Working With Children Checks in Australia, DBS checks in the UK, background or vulnerable sector checks in North America), and what safeguarding policies and training does the system provide?
• Curriculum. Who writes the learning resources, how are they kept current with local curriculum changes, and are they included in your fees?
• Tutors and seasonality. Where will you recruit tutors, who trains them, and how does cash flow move across school terms and holidays?
• Demand in the territory. Count school-age children and schools from census and education department data.
• Model fit. In-centre, home-based or online tutoring franchises need very different capital and hours. Be honest about which suits you; a retail-style centre is a hands-on business that needs an owner who is there.

For a deeper comparison of tutoring brands, use our 12-point checklist for choosing a tutoring franchise.

Frequently asked questions

How long does franchise due diligence take?

For most buyers, six weeks to three months. The 14-day disclosure period in Australia, the US and Canada's regulated provinces is a minimum, not a target.

What is the most important part of a franchise due diligence checklist?

Validation calls with current and former franchisees, followed closely by your own financial forecast. Franchisees tell you what running the business is actually like.

Can I research a franchise without paying for advice?

Much of it, yes, using this checklist, free government courses and public registers. You should still pay a franchise lawyer and an accountant before signing.

Is a franchise due diligence checklist different for a tutoring franchise?

The core checks are the same for any industry. A tutoring franchise adds child-safety screening, curriculum quality, tutor recruitment and school-term seasonality, covered in section 9 above.

Next steps

If Success Tutoring is on your list, put us through this checklist like any other brand. Our investment schedule and potential earnings pages are the starting point for the numbers, the process explains how an enquiry moves to signing and opening, and our franchise stories introduce partners you can learn from. What support is provided is set out in the franchise agreement and disclosure documents, so read them with your advisers before you decide.

This article is general information, not financial or legal advice. Laws and guidance change; verify current rules with official sources and seek independent advice before buying a franchise.