Potential small business owners, including franchisees, need improved education and support when deciding to purchase a business, according to recent research conducted by Griffith University’s Asia-Pacific Centre for Franchising Excellence.

The research was completed by researchers from the University of New South Wales and supported by CPA Australia and it found that the level of due diligence undertaken by prospective small business owners and franchisees in Australia is largely “unsophisticated” and most business owners have a naive appreciation of business.

Across the 60 independent business owners and franchisees interviewed for the research were not familiar with the term “due diligence” or how to accurately conduct due diligence effectively.

In a recent SmartCompany article professor Lorelle Frazer said that the centre decided to undertake the research off the back of an earlier study of the conflict in franchising, which found there was often an “expectations gap” when individuals chose to purchase a franchise.

“Everyone says to make sure you do your due diligence but do we really know if it makes a difference?” Frazer says.

“We wanted to explore that more.”

Franchisees were more likely to seek advice from a lawyer – 64 percent – compared to independents – 28 percent – but independents were more likely to conduct research about their chosen market – 41percent. Additionally, just 14 percent of franchisees said they researched their respective market before making a decision.