Posted on April 9, 2010 by Rush Nigut

No Franchise Disclosure Document? Franchisor Not Ready to Operate

Recently a prospective franchisee asked me to review an agreement from a franchisor. When I asked about the franchise disclosure document, I was told the franchisor did not have one. This is not the first time this has happened.

No matter how great the product or service may be, if the franchisor has not taken the first steps towards a complete franchise offering, you need to wait before going forward. A franchise disclosure document is a bare minimum.

I cannot tell you the number of franchisees I have seen recently who are disappointed in the franchise system they have selected. Often people are investing their life savings into the franchise business. Consequently, it's critical to take your time and consider whether the franchisor has a system in place that will allow you to be successful. If not, you're just wasting your money, and as my favorite accountant says, you'll turn $100 into $10.

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Comments (1) Read through and enter the discussion with the form at the end
Joel Libava - April 14, 2010 1:51 PM

Rush,

This is crazy! In this age of information, (being readily available) how could a real franchisor not have a FDD?

I don't get it. At all.

Where's the FTC on this? Do they know?

The Franchise King®

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