Due Diligence, Luck and Randomness

There are many fine posters on BMM on the subject of Due Diligence (DD). Some of these are legal experts, some are scholars, and some are, like I am, from the school of hard knocks. Over 17 years as a franchisee, I gained what seemed like a lifetime of education about the franchise process. DD is an integral part of deciding to buy or not buy a franchise - but it is limited in predicting success of failure of a franchise system or individual franchisee. No doubt our financial system has been unwinding for many years. Some very astute economists may have seen this coming, but most of what I read indicates that even the best educated in our economy have been surprised at the severity and the rapidity of the deterioration. So, no matter how much DD a potential franchisee did in year 2007, he or she could not have known that an economic tidal wave of epic proportion would strike in 2008, complete with a meltdown of the banking system and Wall Street. DD is only part of a very complex combination of factors that determne the level of success a franchisee will (or will not) have. Luck (good and bad) and simple "randomness" play huge parts. When you sign a franchise agreement today, it is likely for between 10 and 20 years. This is an eternity in our fast moving world. I do not think there is anyone alive that can predict what the business world will look like in 10 years, much less 20. DD will not help you here. DD will not tell you if you will win or lose at the franchise game. It will only give you an indication of whether you will have a fighting chance, given all of the events out of your control. It will give you some sense of what the franchisor looks like today, but it will not tell you what it will look like in a year, 2 , 5, 10, or 20.