Franchise Business Radio: Tune into Franchise Business Radio to listen and learn from Franchise Attorney, Tom Branch. Below are some interview excerpts.
Tune into Franchise Business Radio to listen and learn from Franchise Attorney, Tom Branch. Below are some interview excerpts.
Currie: Tell us about the Franchise Disclosure Document (FDD)?
Branch: The Franchise Disclosure Document is mandated by the Federal Trade Commission rule. Before the rule, it was felt that franchisee prospects either didn’t get information that was helpful or, in some cases, received information that was false. So, the FDD is basically designed to tell a buyer about the franchise company, about the brand, about the deal. Such as, How much is it going to cost to open? The brand and how are they doing? Are they growing or shrinking? Do they have a lot of turnover? Then of course the question we may talk about later is, How much might I expect to make?
Currie: Sometimes franchisors don’t provide financial performance data. How does someone get what they need to build a pro forma?
Branch: They need to go within that brand system and call franchisees. One of the exhibits in the FDD is a list of the franchisees. So, if I’m buying a franchise for Asheville, North Carolina, and there are a couple of other franchisees in North Carolina, then those would be people I might call and not just to ask about numbers, but about what’s your experience been? How was the training? How is the software/ point-of-sale system? Those kinds of questions. And, if you don’t mind my asking, what kind of gross sales are you reaching? Where were you after year one? What’s the ramp-up period? And, sometimes, people will give that kind of information. And sometimes not.
For the complete interview, tune in to FranchiseBusinessRadio.com.
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Pamela Currie has 20-plus years in franchising. As a certified franchise consultant, Pamela helps individuals make an educated and informed decision when selecting a franchise. Pamela enjoys being a resource and partner in helping people find a franchise that aligns for them. Interested in franchise ownership? Contact Pamela, Pam@FranchiseIntellect.com for a complimentary consultation.