Franchisee due diligence: banks must verify business, identity, site and ongoing funds before appointing franchisees.

AD Category I banks, AD Category II entities and FFMCs must verify franchisees' business activities, market position, minimum Net Owned Funds, municipal/shop certifications, physical site existence, identity documents (including PAN and photographs), and obtain incorporated entities' constitutional documents. They should collect a declaration on past or pending criminal cases and may optionally obtain a police conduct certificate. Franchisers must secure a Chartered Accountant's certificate confirming ongoing maintenance of minimum Net Owned Funds and perform these checks at least annually, with documentary proof and site visits.

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