Verify, verify, and verify. Look at the seller's financial statements, tax returns, sales tax returns, and sales reports to the franchisor. Note any discrepancies and thoroughly understand why there could be discrepancies. On the cost side, audit actual invoices from vendors for significant costs, and notice if there are any missing invoices. To calculate labor costs, look at the schedule in detail, and perform your own labor schedule and cost estimate. Be especially careful to note how much time the owner and the owner's family is contributing to the business without reporting it, in order to inflate the actual results. Have an accountant review the financials before closing on the business.

I cover this and other questions you need to ask franchisees before you make a commitment to buy in my "49 Insider Secrets…" eBook (www.49franchisesecrets.com).