Quick Overview of “Ten Essential Questions to Consider when Selecting a Franchise Brand for a Search Fund Journey”

The below is a summary of an article written by Dr. Wasserstein from Yale’s school of management and three multi-unit franchise owners in various franchise systems.

This article is appropriately titled “Ten Essential Questions to Consider when Selecting a Franchise Brand for a Search Fund Journey.” While it covers ten critical questions, it is not meant to be an exhaustive list. The intended audience is individuals who are raising or operating a search fund—not general franchise buyers. Although there is considerable overlap, the recommendations are tailored specifically to search fund entrepreneurs.

For those unfamiliar, a search fund is a model in which an individual—often a recent graduate from a top-tier MBA program—raises capital to acquire a business. These businesses typically generate $1M–$3M in earnings and are purchased at a 3–5× earnings multiple. The goal is to grow and sell the business within about five years, aiming for a 30%+ annual ROI. To finance such an acquisition, the entrepreneur usually needs a cash injection of $300k–$2.4M to qualify for a loan between $2.7M and $10M.

These financial targets and exit expectations are often beyond the reach of first-time franchise buyers. They typically require experience, capital, and operational talent that many new entrepreneurs don’t yet possess. Additionally, search funds carry a high risk of failure, and most first-time franchise buyers lack the risk tolerance needed for such an aggressive and uncertain path.

This model is commonly referred to as ETA—Entrepreneurship Through Acquisition. You’ll see the term ETA used throughout the remainder of this article.

The reason for explaining the search fund model in such detail is to provide context. Some of the criteria or recommendations mentioned by Dr. Wasserstein may not seem relevant or practical to typical franchise buyers—but they make sense within the more specific and demanding framework of ETA.

The article starts with a statement that applies to everyone considering owning a franchise:

We cannot sufficiently emphasize the importance of selecting the right franchise partner

He also cautions those that there is no “perfect” business. You need to know what your personal requirements are and then list what are a few items you can settle with.

We caution entrepreneurs considering these topics to resist the temptation to find a perfect partner. There are probably several that could fit and many that are definitely not suitable, but no franchise brand will present all the elements an entrepreneur might seek

In the article, Dr. Wasserstein mentions Krokit as a resource. I reviewed it and found the data to be outdated—it included franchises that have since failed entirely. While it may offer some directional insights, it’s not worth the nearly $300 price tag. A better starting point would be Franzy, although even that falls short of providing the detailed data a sophisticated buyer would need. At this time, I haven’t found a franchising database that offers the level of insight necessary for serious due diligence. The only reliable way to understand a franchise model is to speak directly with the franchisor and, more importantly, with multiple franchisees.

The 10 Questions

1. What does a successful outcome look like?

2. What is the right industry or category for the project?

3. What are the brand attributes and qualities being sought?

4. What are the franchisor’s qualities and characteristics?

5. To what degree is there operational flexibility?

6. What are the demographics of the current franchisee base?

7. Is the system large or small, and what are the geographic dynamics?

8. What are the store-level economics and financial particulars?

9. What are the actionable entry points?

10. Do the entrepreneur’s personal goals fit tightly with the system?

Read the full article below: https://som.yale.edu/sites/default/files/2025-04/Ten Essential Questions to Consider When Selecting a Franchise Brand for a Search Fund Journey.pdf

Or listen to the authors talking about their article on this podcast: https://acquiringminds.co/articles/aj-wasserstein-michael-horowitz-peter-mistretta

If you're looking for franchises that align with your goals, experience, and values, that's exactly what I help with. I work one-on-one with serious franchise investors to guide them through the research process, avoid common mistakes, and find the right fit.

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