Over 40% of new business owners and franchisees don't know what due diligence is

Professor Lorelle Frazer, director of the Asia-Pacific Centre for Franchising Excellence, told SmartCompany the apparent lack of time and money spent on undertaking due diligence was the most surprising finding to come out of phase two of the research.

“Business owners are often so concerned to know how much it will cost to buy or start a business, which is a big investment, that the last thing they invest in is education leading into it,” she says.

While Frazer says there are some free resources available to prospective business owners, including from governments, it is more often the case that these individuals are missing out on specific, expert advice that applies directly to their business.

“Each business is unique,” Frazer says.

“They need to do their own personal due diligence for their particular business, to make sure they are in the right market, understand the competition and if they are paying the right price for the business.”

Frazer says one of the concerns in the franchising sector is the tendency for prospective franchise owners to seek general professional advice, as opposed to specific advise about franchised business models.