Federal law requires full disclosure of all legal and financial history for franchisors to protect investors from potential scams.3. Enlist the assistance of an attorney specializing in franchise law when you have obtained all disclosure documents if you have any trouble understanding their contents. Be sure you know exactly whom and what you are becoming involved with, including detailed litigation and credit history, prior to signing any Franchise Agreement.
1. Petition a write of the Uniform Franchise Offering Hand-bill from the franchisor as soon as you open seriously considering buying into a franchise Treaty.
2. Observe all disclosure documents if under Federal Commerce Comission Charter for evidence as to Card-sharping or unsavoury litigation history on the part of any member of the franchise's team you may become involved with.Creation of a franchise requires long disclosure documents be filed and maintained for all prospective franchisees and the common to opening, according to Federal Commerce Comission franchise guidelines direct Jan 1, 1996. As a federally regulated protest, a franchise must dispense all confidence requested by possible franchisees in a well timed and concise design or risk prosecution. Provided the Uniform Franchise Offering Hand-bill, (UFOC) is not if to all prospective Franchisees within 10 days of actual subscription, the Treaty Testament be considered in violation of federal enactment and contents to cancellation.
Instructions
4. Know what red flag items To seek in the UFOC, such as a number of settled-out-of-court issues with former franchisees, which may indicate unprofessional practices. Read through several online examples as reference to familiarize yourself with what is typical and what should be questioned.
5. Ask the franchisor about its litigation history. Compare the answers you get with the information provided on the UFOC. Note any discrepancies and ask for clarification before signing as a franchisee.
6. Call other franchisees to obtain specific information pertaining to their litigation experience with the franchiser. Many times, litigation arises from small misunderstanding and is not an indication of truly unsavory business practice.
7. Check out Franchise411.com, which has more information on obtain records from franchise owners (see Resources below).
