Last month, I touched on one of the more complex aspects of the due diligence process – Item 19s and Building P&L’s. This week, I want to simplify things and focus on what is really at the core of due diligence. At its heart, due diligence doesn’t have to be complicated, it's actually pretty simple once you understand the basics.

Let’s start with a fundamental question: when you buy a franchise, what exactly are you buying? A lot of people think you're buying the brand itself—things like the logo, the name, the reputation. But the truth is, what you’re really buying is a license to follow the franchisor’s business operating system.

The operating system is the backbone of the franchise. It’s the playbook that tells you exactly how to run the business. A good operating system is designed to help you reduce business risk in a predictable way. That’s the true value of the franchise system.

So, when you go through the due diligence process and create your long list of 150 questions to ask, here’s the thing to remember: at the end of the day, there are only two questions that matter.

  1. Does the business operating system, when followed, reliably reduce business risk?
    This is the big one. If the answer is yes, then the system has value, will help you avoid costly mistakes, and increase your likelihood of success. If the answer is no, then the system is worthless —and this is the moment when you should seriously consider walking away.

If the first question is a clear ‘Yes’, then you move on to the second question.

  1. Do I have the ability and willingness to follow the system?
    Can you follow the system? Do you have the skills, mindset, and ability to follow the proven steps the franchisor has laid out? One you understand the daily operations, the skills required, the training, the support, and what your role will look like—ask yourself if you’re genuinely ready and willing to follow the system. A great system is worthless if you can’t or won’t follow it.

If your answer to both questions is YES, then you’ve found a system that works and that aligns with your abilities. This means the franchise is worth serious consideration. It’s a match for your skills and expertise, and it has the potential to help you reduce the risks of starting and running your own business.

If both questions are answered positively, it means that if you choose to move forward, you’ll be doing so with confidence. You’ll know that the foundation is solid, that you’re following a system with a proven track record, and that the system aligns with your own strengths. That’s the starting point for making a smart, informed decision.

At the end of the day, due diligence is about more than just getting answers—it’s about understanding whether a franchise is a good fit for you. And it starts by asking the right questions and evaluating whether you can follow a system that works.

This month, I want to take a moment to talk about the Franchise Disclosure Document (FDD), specifically Item 19. A lot of people I talk to assume that Item 19 will tell them everything they need to know about whether a franchise is profitable. Unfortunately, that’s almost never the case.

Let’s break it down. There are four types of Item 19 disclosures you might come across:

  1. The Missing Item 19 – Believe it or not, franchisors aren’t required to share earnings data, and about half of them don’t. If that’s the case, you’ll see two standard paragraphs in Item 19 stating that they could disclose financials but chose not to. On top of that, their employees are prohibited from discussing earnings with you. So, how do you figure out profitability? By talking directly to franchisees.
  2. The Partial Item 19 – Some franchisors will give you some financial data—maybe average gross sales or even a gross profit figure. But here’s the catch: they won’t share all the expenses or net profitability. Without those numbers, you can’t get a full picture of what you might actually earn. Again, the only way to truly understand the financials is by speaking with franchisees.
  3. The Company-Owned P&L – In this case, the franchisor provides a full profit and loss statement—but only for company-owned locations. While that might sound helpful, it can be misleading. A company-owned store might operate differently than a franchisee-run location. It could be a showcase store or a business the franchisor acquired rather than built from scratch using their own system. Useful? Yes. But not enough to base your decision on. You’ll still need to dig deeper by talking to franchisees.
  4. The Hypothetical P&L – This one lays out what profitability could look like at different sales levels. Sounds great, right? The problem is, it’s all based on projections and assumptions, not real-world data. These numbers might be optimistic, outdated, or just plain unrealistic. Once again, your best bet is to talk to franchisees who are actually running the business.

Here’s the bottom line: as much as we’d love to open up the FDD, flip to Item 19, and instantly know how much money we’ll make, it just doesn’t work that way. There are no shortcuts to due diligence. If you want an accurate picture of what you’re getting into, you have to put in the work—especially when it comes to building a realistic P&L. (for more detailed information - read The Educated Franchise)

So, as you explore your options, make it a priority to connect with franchisees. Ask the tough questions. Get a true sense of what’s possible. The better your research, the more confident you’ll be in your decision.

About a month ago, my mother shared a book with me about a man who lived to be 109 years old. Over such a long life, he gained valuable insights, and the book is filled with meaningful lessons. One passage stood out to me—it explored fear and courage, aligning well with the first chapter of The Educated Franchisee.

The passage explains that fear has three components:

  1. A feeling of apprehension.
  2. A physical response, like a pounding heart.
  3. A reaction—some feel the urge to flee, while others summon strength to calm their heart and sharpen their focus.

Following the wisdom of ancient philosophers, the book emphasizes that courage cannot exist without fear. If someone has never felt fear, they’ve never had the opportunity to demonstrate courage. A lack of fear is not bravery—it’s simply ignorance of danger. Stoic philosophers considered courage one of the four cardinal virtues, along with justice, prudence, and self-control. True courage means choosing the right path despite difficulty, staying diligent, and enduring challenges with resilience.

Everyone experiences fear—it’s a natural part of life. The difference is in how we respond. Some embrace fear with strength, courage, and focus, while others avoid situations that make them uncomfortable. Successful business owners learn to navigate uncertainty daily. They wake up with a little fear, harness it, and move forward with courage.

As you look ahead to 2025, pay attention to when fear and anxiety arise in your life. More importantly, notice how you react. We’re all on a journey of growth, and the better we understand ourselves, the more confident we become in our decision-making.  If you are interested, the book is - The Book of Charlie

One of my all-time favorite books is The Millionaire Mind by Dr. Thomas Stanley, a remarkable exploration of the traits and habits that lead to significant achievement. Dr. Stanley, a professor and business theorist, took an academic approach to uncovering the realities of success. Through thousands of interviews and surveys, he created a comprehensive, data-driven study that challenges common misconceptions about what it takes to succeed.

A standout section of the book for me is Table 2-1, titled Millionaires’ Success Factors. Here, Dr. Stanley asks a simple but profound question: “What are the key factors that contributed to your financial success?” The responses, numbering over 100, were distilled into 30 categories.

What makes this table fascinating is how it dispels the myths often associated with success. These high achievers attribute their accomplishments not to inherited privilege, genetic advantages, or sheer luck, but to qualities that anyone can develop with focus and dedication.

The Top 5 Traits of Millionaires

According to Stanley’s research, the five most critical factors for achieving financial success are:

  1. Honesty in all interactions
  2. Strong self-discipline
  3. The ability to get along with others
  4. Having a supportive partner
  5. A willingness to work harder than most

These characteristics are striking in their simplicity. They don’t require advanced degrees, special connections, or extraordinary talent—just a commitment to values, relationships, and effort.

The Bottom 5 Traits of Millionaires

Equally enlightening are the attributes that ranked as least important to financial success. These include:

  1. A strong religious faith
  2. Being lucky
  3. Investing in publicly traded stocks
  4. Having top-notch financial advisors
  5. Graduating at the top of my class

The last item is especially noteworthy, showing that academic performance, often seen as a hallmark of potential, isn’t a determining factor in wealth creation.  This is a powerful reminder that the school of life is more impactful than any college you might attend.

The Bigger Picture

The insights from The Millionaire Mind are both humbling and empowering. They suggest that success isn’t about being born with the right advantages but about cultivating traits like perseverance, self-reliance, and a strong work ethic. These are qualities within reach for anyone willing to put in the effort.

If you’re looking for practical advice and fresh perspectives on what drives success, The Millionaire Mind is a treasure trove of wisdom. It’s packed with insights that will inspire and motivate you to focus on what truly matters.

I highly recommend reading it from cover to cover—you won’t regret it!

It’s been a while since my last update, and much has happened.

For those who may not know, I live on a barrier island in Florida, and the past couple months has been challenging. We were hit by two major hurricanes—the worst I’ve seen in 25 years. To call such events "distracting" would be a massive understatement. They force you to question many aspects of life and test your resilience in profound ways.

As I reflect on the experience, I’ve started to identify lessons that have emerged from these storms. While my perspective may continue to evolve, here are five takeaways that stand out:

1. We Have Too Much Stuff
When the hurricanes hit, our ground level—used as a garage, playroom, and storage—ended up with three feet of water. The sheer volume of things we had accumulated over the years was overwhelming. Many of those items hadn’t been touched in years, and some held emotional attachments that made them hard to part with. The hurricanes made those decisions for us. In the aftermath, we were left with a mountain of items by the curb, most of which we’ll never miss. While I wouldn’t wish a hurricane on anyone, it was an effective (if brutal) way to declutter.

2. Prioritization is Key
Daily life often feels like an endless list of “important” tasks. When a hurricane strikes, that illusion shatters. Suddenly, triage becomes essential. You focus solely on what truly matters and let go of the rest. This intense focus allows for swift action on critical items, a skill that’s just as valuable in everyday life as it is during a crisis.

3. Self-Reliance is Essential
In the midst of a hurricane, there’s no water, no electricity, no cell service, and no internet. You’re on your own. The realization that you are entirely responsible for your safety and well-being is both sobering and empowering. It reinforces the importance of preparation and the ability to take decisive action when needed.

4. Adaptability Trumps Planning
As the saying goes, “Man makes plans, and God laughs.” You can prepare as much as you like, but when the storm arrives, it will do what it wants. Preparation provides a foundation, but adaptability, learning, and inner strength are what carry you through.

5. Count Your Blessings
Even in the midst of devastation, gratitude matters. Many in my community lost everything, yet it’s still possible to find reasons to be thankful. Studies have shown that gratitude is one of the shortest paths to happiness. It’s not always easy, but even during life’s most trying times, it’s worth striving for.

These lessons don’t just apply to hurricanes, they’re relevant to business and life as a whole. Simplify. Prioritize. Focus. Prepare. And above all, remain Positive, no matter how difficult the situation.

Wishing you and your loved ones peace and resilience this holiday season.

A few weeks ago, I was speaking with a new franchisee. He had been in business for around 6 months.  During our conversation, he shared some of the challenges he was facing as he tried to grow in his new role as an owner. His experiences reminded me of a previous life experience I had in the early 1990s when I worked in Japan.

My job in Japan was to work with senior-level Japanese leaders who would soon be taking over large manufacturing facilities in the United States. I was tasked with preparing them for what would be a new, and very different, life. We spent a lot of time discussing the various challenges they would face upon their arrival in the United States.

Initially, they would be dealing with physical challenges. They would be confused by how to set up a bank account, decipher labels in the grocery store, or choose appropriate gifts when visiting someone’s house. Everything would be foreign to them, and they would need to deal with these physical challenges first. However, we also talked extensively about the fact that the physical challenges were the easy part. The harder challenges were the psychological ones.

The psychological challenges begin to occur once the physical challenges subside. They revolve around feelings of not fitting in, not knowing what they are doing, or doubting if they were the right person for the job. In many ways, these psychological challenges related to the idea of not feeling like they were in the right place. However, over time, they would get past both the physical and psychological challenges and start to feel comfortable, productive, and at home.

In many ways, opening a business presents the same types of challenges. In the first six months, new business owners are trying to figure out how to hire people, run the billing system, and respond to customers. These are the physical challenges. However, just like moving to a different country, eventually, the psychological challenges come into play. Doubts such as, "I’m not sure I’m cut out to be a business owner," or "This doesn’t feel like I expected it to," or even, "Why did I do this?" start to arise.

The good news is that eventually, with patience, you get past these challenges and become comfortable, productive, and in the right place. It's important to understand that there is nothing abnormal about these stages. Everyone goes through them, to varying degrees. The key is to remain present, taking it day by day, and not getting too far ahead of ourselves. Just like climbing a mountain, it’s one step at a time.

This month, I'd like to talk a little bit about establishing a personal vision statement.

Step One in The Franchise Playbook is all about defining your personal vision. When I work with individuals who are exploring business ownership, one of the first things we do is work on our personal vision. Some people embrace this process, while others find it either frustrating or don't see the point. My suggestion would be that opening a business without a clear personal vision is like driving your car without any destination. Despite what many people think, opening a business is not the objective for 95% of the folks out there. In most cases, the business is simply a vehicle to get you where you want to go. However, if you don't know where you are going, it's almost impossible to know if you have the right business.

The Franchisee Playbook's Vision Exercise is designed to get you thinking about legacy and impact. In many ways, it's the same as a business's mission statement. Businesses establish mission statements so that, as they make investment and growth decisions, they have a baseline to determine if those decisions are moving the business in the right direction. Without a clearly defined vision, a business would never be able to make the kind of decisions that are required to grow, expand, and succeed.

Unfortunately, as individuals and families, we don't often spend time thinking about what our mission statement might be. We simply let the river of life push us downstream, opportunistically accepting jobs when they come our way, and bemoaning the fact that we always feel a little bit out of control.
My suggestion would be to download Step One from The Franchisee Playbook and work through the exercise. It doesn't matter if you intend to be a business owner, wish to start a nonprofit, or play pickleball every day, a well-developed vision statement will give you clarity and confidence to make decisions that are in line with your goals and objectives.

One last thing—something that you will not find in The Franchisee Playbook. Exercise 1.6 suggests you write a vision statement that is approximately one paragraph long. If you have the inclination, once you have developed your vision statement, work on shortening the statement. The ideal result would be a personal vision statement that only one sentence long. Just so you know, this is exceptionally difficult to do. It took me 10 years before I could confidently verbalize a personal vision statement that was only one sentence long. However, if you eventually are able to do this, you'll find it incredibly powerful in all aspects of life.

Should you wish to take on this challenge, I wish you the very best and stand ready to assist if needed.

As those of you who have read my book know, I really do enjoy sayings that neatly and cleanly summarize a thought or mindset. This month, I'd like to share one of my sayings with you:

"The art of business ownership is the ability to make timely,

confident decisions with incomplete information."

Why do I share this with you? I share this because I've noticed that it's one of the most difficult things for new business owners to do. Many folks begin their career as an employee. As an employee, you quickly learn that making 'halfcocked decisions' spending your employer's money with incomplete information is a recipe for having to find a new job.

In addition, many professions out there require exactness and precision. Being an engineer requires knowing exactly what's going to happen before you begin building the bridge. Being a surgeon requires knowing exactly what you're going to do before you make the first incision. In life, we are often rewarded for making careful, thoughtful decisions and always being right.

Unfortunately, as a business owner, you don't have that luxury. You're constantly having to make decisions with incomplete information. When you hire a new employee, do you know if they're going to work out? Obviously, you don't. You simply hire the best person you can and hope that you're able to train, coach, and motivate the rest. In other words, you start with raw material and you try to build a great employee.

The same thing applies to marketing programs. A new marketing approach is presented. Do you know if it's going to work out? Obviously not. You make a measured investment and you adjust as you go. You track and improve. Over time, you continue to make decisions as to whether it's something that you should continue to focus on or redirect you time and focus.

The challenge lies mostly in being able to make these decisions in a timely, confident manner. If you're not able to do this, you'll spend too much time trying to decide and not nearly enough time moving the business forward.


When I work with people, I let them know that at the end of the process there'll be a time where making a decision is the right thing to do. If you're able to recognize that point in time and make a timely, confident decision, it bodes well for your ability to be successful as a business owner. On the other hand, if it comes to that point and you continue to ask more and more questions that are less and less relevant, if you're unable to sleep at night worried about possibly making the wrong decision, if your primary emotion is worry and fear, don't do it!

Being a business owner isn't for everyone. Being comfortable with uncertainty is a prerequisite. The confidence to adjust, correct, and grow is foundational to success. For those of you exploring business ownership, I hope this blog helps you determine whether the path of ownership is suitable for you.

It's been a minute since my last newsletter. I've been super busy with graduations, family events, and a business that thankfully continues to grow and expand.

This month I thought I would share a story.  Many years ago, back in college, I severely tore my ACL while playing soccer—an injury that I finally had repaired about five years ago. Part of my rehabilitation has been Pilates. I never thought I'd say it, but Pilates has made a significant difference in my overall physical and mental health. I would strongly suggest Pilates to anyone looking to get back in shape, or simply to those who spend a lot of time sitting at a desk in front of a computer like I do.

A few weeks ago, I was in class and I noticed for the first time a chalkboard that said:

'When You feel like quitting,

Think About Why you started.'

I don't know why I didn't notice it months, or even years earlier, but there it was. As I continued through the class, I kept thinking about the saying. I began to realize that it has to do with much more than just exercise. It applies equally well to what I do every day—starting and growing businesses.

As you may recall, a year ago we opened an Ellie Mental Health franchise in our local community. As much as I'd like to say it was all roses, it was not. As with anything in life worth achieving, it has been a fight. There were times my partners and I questioned ourselves: "Why did we bother to open the business?" We didn't need to, and we already had plenty on our plate to keep us busy. Every time we asked this question, we refocused on our long-term vision: Where do we want to be in 5 years, or even 10 years from now, and are we on the right path to get there? Each time we asked that question, we realized that we are both on track and achieving good things. This mind set allowed us, in the heat of the moment, to gain perspective, focus, and the resilience that's occasionally necessary to carry on.

Today, after 12 months in business, our Ellie Mental Health is breaking even and we are on track to achieve our goals and objectives. We realize that there will continue to be challenges. That's life. But we're keeping our eye on our long-term goals.

For those business owners who are reading this, you know this story isn’t unusual. In fact, it's pretty much the norm. We open with a business plan. We execute the plan. Things don't go as planned and we question ourselves. We then put our heads down, and push forward.

Let's delve into the concept of ‘Capital’.  Not a county, state or national capital, but the type of capital we amass over a lifetime.

Financial Capital

When posed with the question, "Tell me about the capital you can bring to the business," many immediately think of ‘financial capital’. Most of us begin life with modest means.  And, throughout our life, we work to accumulate greater financial resources. This type of capital is relatively easy to measure – a glance at your net worth statement swiftly reveals whether your financial standing is improving.  When it comes to financial capital, our goal might be to become ‘financially unbreakable’.  This is the point where we no longer need to worry about our financial position.

Intellectual Capital

Yet, not everyone defaults to financial capital. Occasionally, when I mention capital, people consider ‘intellectual capital’. This form of capital is cultivated over years of study, often represented by academic degrees such as a college, master's, or even a doctorate degree. Intellectual capital can also be acquired through the school of Hard Knocks, with the adage that 10,000 hours of experience is necessary to become an expert at something.  Intellectual capital focuses on the importance of what lies between the ears. The intriguing aspect of intellectual capital is its resilience – it cannot be easily taken away, and it typically does not diminish during one's work life.

Social Capital

However, there's another type of capital that often goes unnoticed – ‘social capital’. In essence, social capital is defined by who you know and how effectively you can get things done. Those with a robust social capital network can make a couple of phone calls and promptly connect with the right person. They are individuals who can text community leaders, with responses arriving by day's end. For most people, social capital revolves around the communities they have been part of for years – beginning with school friends, expanding with work acquaintances, and maturing through community involvement and giving back. Those who invest significantly in their communities tend to possess substantial social networks, facilitating the opening of doors with ease.

When establishing a business, financial resources and necessary skill sets are undoubtedly crucial. However, the power of social capital should never be underestimated. Being able to open doors and speak with the right person has real value.  If you are new to a community, focus on building social capital.  If you have lived in a community for many years, continue to expand your social capital.  Get involved, give back and makes friends.  Not only does it feel good, but it is also good for you and your business.

Buying a Franchise? Let the Franchisee Resource Center Help
Get Help
Review Hundreds of FDD’s from top franchises - view the site.
View FDDs
You can buy & download current FDD’s in the industry in one place!
 Buy FDDs
The Insiders Guide | Find the Perfect Franchise for you
Buy the 3rd Edition
© 2021 | The Educated Franchisee | All Rights Reserved
Powered by Saint George