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Franchising is always held by big and growing organizations as a very important concept that further their business interests towards attaining maximized revenues. Franchising is one concept wherein the franchisee is an independent entity which leverages from the franchiser trademark. The franchisee owns all the resources and operations of the outlet and hence the revenues are also kept by the franchisee. Franchiser benefits through a royalty decided between the two parties. It also benefits with more brand value without investing much into it. Ideally, a party is made a franchisee only when it fulfills certain criteria such as possessing space and equipment as desired by the franchiser. Once all the criterion are met only then the two parties go to the next level. While checking the fulfillment of criterion can be handled by the franchiser itself, looking into other aspects need help from seasoned professionals. Companies need to know whether the prospective franchisee has a clean compliance history, whether the identity and line of work is authentic and legal, and so on. In order to address such concerns before empaneling a prospective one, franchisee due diligence needs to be conducted. A thorough due diligence of the prospective franchisee would mean checking the background facts as stated by the entity, as well as digging out details about other aspects that can have a bearing on the franchising decision. To name a few, franchise due diligence involves business address checks, background check of the owners , checking to confirm due adherence to various Indian and global regulations like UK Bribery Act, US FCPA, Indian Prevention of Money Laundering Act, and so on. Franchisee due diligence, as mentioned before, is a 360 degree look at an entity's background to ensure that it is safe to get into a franchise agreement with it from every aspect. Having knowing about the ecosystem the entity lives and thrives in, as well as its track record, it is easier to resonate with the franchising deal. This is in line with the common belief that risks get mitigated to a large extent if the light is thrown upon the aspects of an entity's background that are still in dark for the party pondering on getting into a deal with it. Just to conclude, franchise due diligence, although done prior to fixing the deal, is one useful tool the fruits of which are reaped for a long time to come. A company opting for this risk mitigation tool is a company that takes prudent strategic decisions. Naman is associated with a leading background screening company that specializes in Franchise Due Diligence
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Franchise due diligence, Due diligence buying a franchise, Due diligence of a company, Company background checks, acquisition due diligence,
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