Quick answer
Franchise due diligence starts with the person who builds your shortlist, because that list decides which brands you ever see. Ask any consultant five questions about pay, prescreening, matching, price pressure and what you must verify yourself. Clear, documented answers earn trust, and vague ones don’t.
Choosing a consultant is often the first franchise due diligence decision a candidate makes, and most make it on a good conversation. The shortlist you receive then shapes every brand you evaluate. The questions below, with the evidence to request for each, let you test it before you rely on it.
Franchise Due Diligence Starts With the Shortlist
A shortlist feels like neutral advice, but it comes from someone with a business model. Under the FTC Franchise Rule, a franchise seller includes anyone who arranges a franchise sale, along with third parties involved in franchise sales activities.
That doesn’t make consultants untrustworthy. It means you should test their recommendations the way you’d test any advice tied to compensation. Only a handful of states require third-party sellers to register, and in May 2026 NASAA adopted a model act that would require registration and disclosure of how they’re paid.
Five Questions to Ask Before You Trust a Shortlist
Use these five questions in your first call, and ask for the answers in writing. They work for any consultant, including us.
| Question | A strong answer | A warning sign |
|---|---|---|
| 1. Who pays you? | Names who pays and how the amount is set, in writing | Vague answers, or pay that rises with a franchise’s price |
| 2. How did you prescreen each brand? | Names the FDD Items and documents reviewed | “We only work with great brands” |
| 3. How will you match a brand to me? | Starts with your skills, capital and lifestyle | Starts with a brand presentation |
| 4. What if my best fit costs the least? | Says so and presents it anyway | Steers toward the costliest option |
| 5. What should I verify myself? | Encourages franchisee calls and attorney review | Discourages outside checks or sets a signing deadline |
1. Who pays you, and how is the amount set?
Most consultants are paid by franchisors, so ask how the payment works and whether it changes with the brand or its price. The FTC’s guide to buying a franchise says third parties who sell franchises often work for franchisors and are paid only if a sale is made.
Pro tip
Ask the franchisor’s development team the same compensation question the consultant answered. The two answers should match, and any gap deserves a follow-up question before you go further. Write both answers down so you can compare them later.
2. How did you prescreen each brand?
Prescreening should leave a paper trail. Ask which parts of each brand’s franchise disclosure document the consultant reviewed and what they found. A consultant who can explain a franchise system’s litigation history, outlet turnover and financial statements has done the reading, while one who can’t may be relaying the franchisor’s pitch.
3. How will you match a brand to me?
Matching should begin with you. Ask what the consultant will learn about your skills, available capital and lifestyle before naming a single franchise opportunity. If your first meeting is a brand presentation, the shortlist started in the wrong place.
If we start with you, we then start building a model that makes sense. And then we can use that as the magnet to attract the brands.
Scott Thompson
Lead Franchise Consultant, Your Future Franchise
LinkedIn profile
4. What happens if my best fit costs the least?
Pay tied to price creates a pull toward costlier brands. The FTC guide notes that some sellers earn a commission based on the cost of the franchise and may steer you toward a more costly one. Ask how the consultant would handle a lower-cost best fit, and whether they’ve ever recommended one.
5. What should I verify myself?
A trustworthy consultant expects you to check their work. Ask whether they’ll encourage validation calls with current and former franchisees and a review by a franchise attorney before you sign. Our guide to franchise validation calls shows what to ask each existing franchisee.
Check Their Prescreen Against the FDD
You don’t have to take a prescreen on faith. Every franchisor must give you its franchise disclosure document at least 14 calendar days before you sign or pay. These five Items let you test what a consultant tells you.
Five Items that test a prescreen
Item 3
Has it been sued?
Litigation history for the franchisor and key people
Item 4
Has it gone bankrupt?
Bankruptcy history over the past 10 years
Item 19
How do units perform?
Financial performance representations, if published
Item 20
Who can I call?
Outlet counts, turnover and franchisee contacts
Item 21
What do the books show?
Audited financial statements
Source: 16 CFR 436.5
Item 21 includes the franchisor’s balance sheets, statements of operations and cash flow statements, and an independent CPA must audit them. A franchise attorney and financial advisor can read these key documents with you and flag what the consultant’s summary left out.
Your Own Due Diligence After the Shortlist
A prescreen narrows the field. It doesn’t finish the due diligence process, and these five steps stay with you. Our guide to how to choose a franchise adds the final checks before signing.
Your five checks
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1
Get the FDD
The 14 day clock starts when you receive it.
-
2
Read key Items
Items 3, 4, 19, 20 and 21 test the pitch.
-
3
Call owners
Current and former franchisees tell you what the pitch won’t.
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4
Hire an attorney
A lawyer explains your obligations under the contract.
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5
Review the numbers
An accountant helps you read the franchisor’s financial statements.
Source: FTC Consumer Guide to Buying a Franchise and 16 CFR 436.2
Watch out
Earnings claims belong in Item 19, the financial performance section. If anyone, including a consultant, quotes revenue or profit you can’t find there, ask for it in writing. Then take it to your franchise attorney before you sign the franchise agreement.
Why We Welcome These Questions
We’d rather you ask these questions than skip them. Scott Thompson brings 25+ years as a franchisee and franchisor and teaches at the University of Georgia. We use the FranChoice network for prescreened franchisor introductions and focus on fit, not pushing deals or promising outcomes.
Our seven-step process starts with your goals before any brand appears. Attorneys, lenders and CPAs in our network bill separately, and we serve candidates nationally, with particular strength as a franchise consultant in Atlanta, Georgia.
Candidates never pay a consulting fee. Franchisors compensate Your Future Franchise when an introduced candidate purchases a franchise.
Franchise Due Diligence FAQs
What is franchise due diligence?
It’s the research you complete before signing, including reading the FDD, calling current and former franchise owners and having a franchise attorney and accountant review the documents and numbers. A consultant can guide the due diligence process, but the verification is yours.
Do I still need to do due diligence if a consultant prescreens brands?
Yes. A prescreen narrows the list, but it doesn’t replace your own review of the FDD, your franchisee calls or your attorney’s read of the franchise agreement.
Does a franchise consultant have to be registered?
Only in some states. Washington and New York require third-party franchise sellers to register. If you live in a state with a registration requirement, ask the consultant where they’re registered.
Which documents should I review before I commit?
Start with the FDD and the franchise agreement, then the Item 19 financial performance representations if the franchisor provides them. Have a franchise attorney review the contract and a financial advisor or accountant review the numbers.
About the author
Expertise from Scott Thompson, Lead Franchise Consultant at Your Future Franchise. Scott has spent 25+ years as a franchisee and franchisor, teaches at the University of Georgia and works through the FranChoice network to introduce candidates to franchisors. About page and LinkedIn profile
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