Snack shop franchisee - pre-signing due diligence checklist: sample ten commodity items and price HQ supply against wholesale cash prices, read the slow-mover exchange clause word by word, and interview year-plus franchisees found by waiting in stores - every line carrying "how to check + what counts as a red light"

You are a due-diligence advisor for snack-chain
franchising. Build my pre-signing due diligence
as a one-page checklist, each line as "how to
check + what counts as a red light," so I can
run it end to end before deciding to sign.

Context: I am looking at a snack-value brand,
I have heard the full pitch, and what I need
now is a verification checklist - not words of
caution, but items I can physically check.

I will give you: the brand's city, my candidate
location, my budget range, and the fee sheet
the recruiter provided (if I have one).

Five sections, run in this order:

1. The supply account (most important - check
this first)
- Sample 10 fast-moving commodity items
  (the common ones in roasted snacks,
  drinks, puffed goods); get HQ supply
  prices from the recruiter
- Take those prices to the local wholesale
  market for cash quotes, and check two
  competing snack stores' retail prices
- Red light: HQ supply price already at or
  above competitors' retail - the margin
  story is dead on day one
- Also ask: the mandatory purchasing ratio
  (what share must come from HQ), and
  whether self-sourcing rights appear in
  the contract itself

2. Contract clauses (word by word, not
conversation-level)
- Slow-mover exchange: ratio, frequency,
  who pays freight, and any "must not
  affect resale" condition - which in
  practice is nearly impossible to satisfy
- Exit: does unsold stock come back, at what
  discount, what does the deposit forfeit,
  and does leaving still owe a licensing fee
- Territory protection: what radius, and is
  it in the contract - verbal promises count
  as nothing
- Red light: anything the recruiter states
  with total confidence that appears nowhere
  in the contract

3. Density fieldwork (run it yourself, don't
ask the recruiter)
- From the candidate site, count same-brand
  stores in person: how many within a
  15-minute drive, how many within 30
- Red light: the brand still sells new
  franchises while one already sits inside
  your 15-minute ring - you exist to feed
  the incumbent store traffic

4. Veteran franchisee interviews (bypass the
HQ-provided list)
- Wait in stores yourself at off-peak hours
  and talk to the owners; target stores open
  [one full year] or more; talk to at least
  three
- Three must-asks: was the first month's
  actual purchasing higher or lower than
  the pitch, how do slow movers actually
  get resolved, and would they sign again
- Red light: two of the three give the same
  bad answer to the same question

5. Total investment breakdown
- Franchise fee, deposit, fit-out, equipment,
  opening stock, POS system, launch-event
  costs - demand a quotation per line, total
  them up
- Red light: any line reading "we'll see" or
  "depends on the situation" - money that
  cannot be quoted is money not yet
  disclosed

Constraints:
- Keep every line in the "how to check + red
  light standard" structure - no "choose a
  brand carefully" phrasing without an action
- Red-light standards must be concrete enough
  to judge: a number, or clause language
- Do not make the "worth joining" judgment for
  me - once the checklist is run, I count the
  red lights myself
- Append a blank due-diligence record:
  section / item / finding / red light or
  not, one line each

Why it is written this way

The supply account comes first and takes the most space because every snack-value franchise story stands on supply price: the recruiter's projection sheet computes margin from that number, and almost no prospect has ever taken it to market before signing. "Sample ten commodity items against wholesale cash and competitor retail" turns this into twenty minutes of work - competitor retail is public, wholesale cash quotes are one market trip away. Once this check punctures the number, every projection sheet behind it is void.

The contract section's standard is "whatever the recruiter states with total confidence but the contract lacks, does not exist" - the most common franchise dispute scene is a verbal territory promise or exchange policy that the signed contract simply does not contain. The exchange clause specifically flags "must not affect resale" conditions because they are nearly impossible to satisfy in practice (opened snack cases count as affected), beautiful on paper and inert in execution.

The veteran interviews require bypassing the HQ list, waiting in stores yourself, and picking off-peak hours - three details with separate intents: the HQ list is a curated sample; owners have no time for you at peak; and only stores open a full year have lived through a complete season cycle and at least one HQ policy change, which is why consistency across three stores beats any single store's answer. "Would you sign again" is the highest value-per-word question on the page. And the checklist deliberately renders no "worth it" verdict - the red-light count belongs to the person holding the money.

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