What is a Franchise Business Review and Do I Need One?

Picture of Schuyler "Rocky" Reidel

Schuyler "Rocky" Reidel

Schuyler is the founder and managing attorney for Reidel Law Firm.

Reidellawfirm.com | What is a Franchise Business Review and Do I Need One?

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Businesses that conduct internal audits win.

Whether to gain financing or improve services, this act is vital.

With it, you can achieve high franchisee satisfaction.  And receive positive ratings from those who visit your operation.

We want to equip you with the necessary steps to follow.  So you don’t have to waste valuable time on internet research. 

Continue and learn how to make the most informed decision.

Assessment and Analysis of Your Franchise 

Commence the review by remembering your ultimate goal in franchising.  The original driver that made you a small business owner.

Overview of How Reviews Are Conducted

Smart entrepreneurs will make franchise reviews a part of their routine.

What you’ll need:

  • Initial sale documents from the franchisor
  • Financial statements
  • Business plan

We’ll offer more details as we move along.

Benefits of Conducting an Assessment/Analysis

Determining if your purchase is paying off will help you join top franchises.

There are various reasons for taking a step back:

  • Securing financing from the bank
  • Tax and estate planning

Acquiring a loan becomes easier when you show that your franchise investment is safe.  This may require a hard look at where you stand.

But if it aids in the development of your company, it’s beneficial.

A goal of your estate plan is for business-based wealth to reach beneficiaries.  While reducing the taxes they’ll pay.

Verifying available resources allows you to more accurately estimate assets to list.

Steps to Take for a Successful Review

To ensure success, we recommend hiring legal services so you don’t miss a step.

Actions to begin with:

  1. Critiquing your franchisee contract 
  2. Evaluating your Franchise Disclosure Document (FDD

Owners like yourself should regularly check that the franchisor satisfied the terms of your initial contract.  This involves reading through the franchise agreement.

If they promised mentorship, grade how often they did so.  

They should have also assisted your marketing strategy.  From the website to social media, evaluate their follow-through.

Let’s unpack the justification for pulling out the FDD.


  • Education on how you met obligations
  • Alignment with industry norms
  • Insights into your franchisor system

Next, we’ll reveal what you can expect from the franchise reviews.

Types of Reports Produced From a Franchise Business Review 

Naturally, you want a return for your time spent on a franchise business review.  After all, you are devoting resources towards its completion.

Financial Statements and Income Tax Returns

Beyond franchise fees, there are many other monetary insights to realize.

As mentioned earlier, estate planning or selling the business begins with a valuation of your own business.

Areas to study:

  • Hard assets from your books and records
  • Sales of similar companies
  • Forecasted future income

Don’t be surprised by a low book value from your research.  

Because it doesn’t include certain finance numbers.  Income and revenue generated by your daily operations.

Franchisors are a good place to get information on comparables.  Another great source is a franchise lawyer.  

With this intelligence, make adjustments for differences in:

  • Brands you’re studying
  • Geography

Economic conditions in the franchise industry, time value of money, and business risk simplify forecasting.

Overall, a low value is good if you’re seeking to avoid estate taxes.  On the other hand, a higher value is ideal for selling.

Overview of Assets & Liabilities, Cash Flow & Profitability

Time to look over your balance sheet.

Your focus should be on:

  • Assets
  • Liabilities
  • Equity

The right franchise will ask questions for each section.  Once again, the main purpose is a realistic valuation of your company.

If you manage this step effectively, ongoing success is both possible and achievable.

Franchise business reviews of this nature can benefit from professional guidance.  The reason is that they’ve worked with brands like yours.  

And can offer a more accurate depiction.  Because this could make the difference between a satisfied feeling post sale, strongly consider it.

Market Research on the Franchise, Including Competition Analysis

As an owner, your franchise business opportunities involves competitor research.

Do they have superior service?  Better marketing?  A cleaner website?

Gaining a competitive advantage for your company will require uncovering how they compare.

Your tools in this review:

  1. Franchisees
  2. Secret shopping
  3. Internet search

Owners in your network can give advice on cost-effective means for rival information.  Instead of investing in a market research firm, start here.

With your sphere of influence.

A first-hand report on brands is possible by physically walking into their operation.  Note how they treat customers.

And the public image surrounding their business. 

Online ratings carry more weight in 2023.  Google is the first search engine to check.  But there are others.

Another good location is their business website.  In the form of testimonials.

This franchise business review might turn up useful business opportunities.  For example, a gap that your brand can fill.

Also, look for repeated words or phrases of what sets them apart from you. 

Industry Trends and Regulations

Adjusting to shifts within your industry will build up franchisee satisfaction.

Future of franchising:

  • Growth through the addition of brands
  • Evolving racial demographics
  • Rise of automation

Before your business maxes out its territory, consider another purchase.  Attaching extra revenue streams will improve cash flow.

It also spreads out risk.  Which protects your resources against factors outside of your control.

The economy, changing tastes, and market cycles are a few examples that come to mind.

Marketing to the Hispanic, Black, and Asian communities is a timely option.  A multicultural investment assists in reaching this growing economic force.  

Ensuring their purchase is for your services.  And not the franchise down the street.

Link quality training and technology correctly and you can expect an improved position in the market.

Tools such as touch-screen kiosks in your fast food restaurant are one option.  Just remember not to sacrifice customer service when you do.

To wrap up, we’d like to simplify your search for a partner in this undertaking.

Reidel Law Firm and the Franchise Industry

As experts in franchise law, we can help you handle the legal aspects of any franchisee issues.  

In addition, our legal team can advise you on ways to shore up gaps in the following areas:

  • Review personal guaranty and real estate control docs
  • Franchisee formation, guidance, and asset protection
  • Franchise operating compliance audit and coaching

By effectively managing risk and maximizing opportunities for businesses we answer the needs of our clients wherever and whenever they arise.

Call Reidel Law Firm today at (832) 510-3292 or fill out our contact form.  And see how our advice can bring you success in the franchise industry. 

Expert FDD Review Awaits!

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