What due diligence should be done when buying an existing franchise?

Research should be your number one priority.


A prospective franchisee should always undertake research that includes and is not limited to:

  • Annual financial statements and/or management accounts
  • A list of stock
  • Valuation of assets to be purchased
  • Staff audit
  • Contingent liabilities of the existing concern
  • Transferring concern to a new legal entity
  • Checking customer base and suppliers with existing contracts.
Ethel Nyembe
About the Author
Ethel Nyembe has had a varied career ranging from Public Relations and Media to Banking. Starting with a media career that included radio and television (presenting, scriptwriting and producing) at the South African Broadcasting Corporation (SABC), she moved on to a position as an Account Executive in newsprint at Business Day. Ethel wrapped up an eleven-year media career as the Deputy General Manager for Sales and Marketing for Sunday Times in 2004. 2004 marked Ethel’s introduction to a career in banking, where she began a six-year tenure at First National Bank. In the first quarter of 2010, she joined Standard Bank, where she is currently the Head of Small Enterprise, Retail Banking, South Africa. Ethel is passionate about the entrepreneurial spirit South Africa holds, and has served on several business boards, as well as on the boards of co-operatives in the Johannesburg city centre and Economic forums in Gauteng. She has a keen interest in sport and the social upliftment of the community.

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