5. Do I really have to read through the legislation?
Yes. There is no two ways about it.
Before you start offering a franchise, sit down with an experienced franchising lawyer, and ask what all rules and regulations you will need to follow. This is a good investment, considering the problems and possible fines it will prevent.
In the United States, all franchising transactions are regulated by the Federal Trade Commission (FTC). The franchiser has to issue a Franchise Disclosure Document (FDD) regarding their financial situation. This is presented to the franchisee for revision before closing the contract. It is a long, oftentimes complicated read, but a necessary one. The information is very important – it is the franchiser’s summary of their company’s financial status and managerial experience, as well as a code of practice for the franchisee, and the like. Legislation may differ from one state to the next, additional requirements have been established in some places.
