- Business experience of the franchisor and a list of affiliates and officers
- Any litigation that the franchisor has pending that may impact franchisees
- The estimated initial investment and all fees, including the initial franchise fee, ongoing royalties, advertising fees, transfer fees, etc.
- Any restrictions on the sale of products, services, and also on their sources
- Available financing and territory rights
- Renewal, termination, transfer and dispute resolution
- Information on the financial performance of franchised and/or company units (optional)
- List of outlets and franchisees, including any who left the system in the last year, and three-year grid by state of opened/closed/sold/transferred units
- Audited financial statements of the franchisor
- Sample franchise agreement
- While getting a good sense of the franchisor and its systems and track record, you’ll also be looking for red flags in the disclosure documents. A high number of re-sales or closures or significant franchisor vs. franchisee legal disputes may be cause for concern. This does not necessarily mean that coming across an alarming sign or two means you should start looking elsewhere, but it certainly warrants further discussion on the topic with the franchisor and maybe even some franchisees.
- Once you’ve completed your due diligence and are pretty certain that you’ve found the right franchise for you, it’s a good idea to have a qualified franchise attorney review the franchise agreement section of the FDD to make sure you understand the various legal provisions.
- Contact FranNet with questions or concerns, or to learn about other franchise options that may be a better fit prior to making a final decision. By getting to know you and what your goals, ambitions and capabilities are, I can counsel you as to whether the road you are heading down truly is a road you want to travel. I’ve personally helped many individuals, couples and families select the right business and start down a road toward success. All of my consultations, events and workshops are on a no-fee, no-obligation basis.
We have several free events coming in the next month and a half where you can learn more about franchising. This includes two webinars and our signature event, "Meet the Franchisors," that puts you in the same room with franchisors looking to expand in Michigan. For more information, please visit frannet.com/bbetser or look at the links to the right.
You can always contact me at email@example.com or 616-891-1374 with any questions or to learn more about franchising.