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Franchising . Franchise Agreement
Two important documents are the Disclosure Document and the Franchise Agreement. Let's consider how each can be helpful to you.
The Disclosure Document
Every franchiser is required by the Federal Trade Commission to prepare an extensive disclosure document for each potential franchise purchaser. Perhaps no other business is required by law to provide as much information to prospective buyers and franchisees.
Over twenty different items of information about the franchise are included in the disclosure document. These items include information about the history of the company, required fees and investment costs, information about the franchiser, and any litigation in which the company has been involved.
When you are given the disclosure, you will be asked to sign and date a statement that you were indeed, given the document. No monies can be taken by the franchiser for ten (10) business days from the time you sign the disclosure. The ten days affords you the time to study, evaluate and prepare your financing. The disclosure document should be studied carefully.