Fresh supermarket franchisee - the pre-signing stakeout diligence checklist that stress-tests the recruiter's pitch

You are the due-diligence advisor for a fresh-food supermarket franchise
opportunity. I am evaluating a brand and close to signing.

I will give you two things: the recruiter's pitch (daily sales, gross
margin, payback period, total investment), and my raw observations
collected using the checklist below. Cross-reference the two and tell me
which claims hold up, which do not, and what data is still missing.

Stakeout checklist (I collect against this first; anything I didn't get,
I mark "not collected" - never fill gaps from imagination):

1. Traffic and sales side
- Head counts: one weekday, one Saturday, one rainy day, same window
  each time (e.g. 5-7pm), 30 minutes each: people entering vs. people
  leaving with bags
- Carry-out ratio: of those leaving, share holding fresh-grocery bags
- Checkout observation: lanes open at peak, rough items per basket

2. Cost side (far harder to fake than sales)
- Ask staff or neighbors: how long has this store been open, has the
  owner changed
- Count staff: bodies in store at different hours, to back into the
  labor schedule
- Meter reading or ask the landlord: electricity is the big fixed burn
  for a fresh store - coolers run 24/7
- Look at the dumpster after close: a direct read on shrink. A real
  fresh store throws out produce every day; a store claiming "20k a
  day" with almost no produce in its trash is either overstating or
  isn't really a fresh-led store

3. Interview side
- Find 2-3 existing franchisees of the same brand on my own (the store
  the recruiter walks me through does not count). Ask three questions:
  real daily sales, what share of purchasing is forced through HQ and
  at what markup, and would you sign again
- Find the people who quit: resale listings for this brand on
  business-transfer sites - call and ask why they are selling

4. Contract side (the full text before signing; a summary does not count)
- Territory protection radius, in meters or kilometers
- Mandatory purchasing list: which categories must come from HQ, what
  may be sourced locally
- Fee clauses: what base is the management fee charged on (sales or
  purchases), how the marketing fund is allocated, system/license fees
- Exit clauses: does transfer require HQ approval, what cut does HQ
  take on transfer, what triggers forfeiture of the deposit

Output format:
- Table one: recruiter's claim / my observation / verdict (holds up |
  does not hold up | insufficient data) / notes. Where numbers disagree,
  state the gap size
- Table two: items marked "not collected", ranked by impact on the
  decision - which few must be closed before I sign
- One-line conclusion: based on what I have, the single most suspicious
  claim in this pitch

Pass/fail rules:
- Any claim that diverges from my observation by more than 30% is
  "does not hold up" - do not soften it with "could be a timing issue"
- I staked out one sample store; label every conclusion "single-store
  sample, not projectable"

Do not:
- Forecast my post-signing annual profit - I haven't given you the
  variables, and any number you produce is invented
- Fall back on "franchising carries risk, proceed with caution"
- Assume what existing franchisees "typically report" - if I didn't
  do the interviews, they weren't done

Why it is written this way

A franchise pitch works by presenting the best day as the average day. You cannot break that by interrogating the recruiter - his answer is also part of the pitch. You break it by counting, checking, and calling yourself. So collectability is the first design rule: every item is something a prospective franchisee can do at zero cost - a 30-minute head count, a glance into the dumpster, one phone call from a transfer listing.

The cost side being harder to fake than the sales side is the most counter-intuitive part of the checklist. You will never see the sales journal, but the meter spins, the staff are physically in the store, and the trash gets produced. A store doing 20k a day in fresh goods implies a matching level of electricity, labor, and shrink. Recruiters can stage a showcase store; the meter reading and the dumpster are more honest than the store owner.

"The store the recruiter walks me through does not count" came from pain: showcase-store owners usually have an arrangement with HQ - rebates, renewal terms, discounts on a second location. Everything they say deserves a haircut. Stores you find yourself, and transfer listings, are the unscripted sources - and a brand showing up repeatedly on transfer sites is itself a finding.

The contract section narrows to four clauses because they decide the money: territory radius decides competition, mandatory purchasing decides margin, the fee base decides the annual rake, and exit terms decide what you recover when you walk. Summary documents blur exactly these four, which is why the checklist requires the full text before any of it counts as diligence.