Lifestyle, flexibility, independence, control and a challenge are all reasons why people may decide to become a franchisee. Money is also a factor but is usually not the driving force for such a decision, according to findings from research.

In 2016, Griffith University’s Asia-Pacific Centre for Franchising Excellence, in conjunction with researchers from the University of New South Wales, researched the due diligence processes of small business owners in a project funded by CPA Australia (Certified Practising Accountants).

The research, involved 60 interviews and further online statistical analysis. It was focussed on the effectiveness of undertaking due diligence prior to starting up or purchasing a small business or franchise.

This includes the amount and type of due diligence people undertake and how these practices compare between independent small business owners and franchisees. It also explored how due diligence affects an owner’s expectations, level of satisfaction and overall business performance.

“We are constantly telling people to undertake due diligence so this project was designed to investigate the actual impact that it does have,” said Professor Lorelle Frazer.

She said the findings from the research to date points to a wide range of due diligence practices, spanning from nothing to years, with most falling within a timeframe of several months.

“Most people who want to go into business do first consider various types of businesses in different sectors. They know they want to have their own business and they will look into various options,” Professor Frazer said.

Many will utilise the services of an advisor, such as their accountant, during due diligence but there is scope for greater use of specialist advisors, such as accountants, financial advisers and lawyers specialising in franchising.

Professor Frazer said it was already apparent that success and satisfaction in small business owners, both independent and franchisees, is not determined solely by money.

“They are happy to give up money and get by in return for a better lifestyle with some flexibility, independence, control, and also the challenge of running their own business,” she said.

“A common mistake for many people going into business for the first time is they do not realise, even with the help of an accountant, that the projected figures are based on the assumption of them and their partner working in it fulltime. This can be a shock, but generally people realise it will be hard work and the level of satisfaction with their business is high.”

Get free access to Phase 1 and Phase 2 of the Due Diligence Research Report directly to your inbox.

Thinking of buying a franchise business? Do you want to make the wisest and safest decision before entering a franchise agreement? Then our Franchise Opportunity Assessment and Advice service might be for you.