As a general rule, the government requires that franchise owners provide potential franchisees with specific information so that you can make an informed decision - this is known as the Federal Trade Commission's Franchise and Business Opportunity Rule.
Key to this rule is the responsibility of franchisors to provide potential franchisees with a 'Detailed Disclosure Document' during the pre-sale stage. This is an essential piece of information that can provide valuable insight into your chosen franchise.
The detailed disclosure is required to contain the following:
- Contact information for at least 10 previous purchasers in your area
- An audited financial statement
- Executive profile information
- A true view of the business start up and maintenance costs
- An outline of respective franchisee and franchisor responsibilities
The document must be provided at least 10 business days before you pay any money or legally commit yourself to a purchase. A franchise consultant can help you review the document, and you should engage a franchise attorney as well to provide expert legal guidance.
To learn more about investing in a franchise, attend our free monthly webinar, Franchise Ownership as a More Stable Career Path. The webinar is free, but you need to pre-register, which you can do online by clicking on the linked seminar title.
You may also register by calling 866-246-2884.