Franchise Disclosure Document:

Essential Information

 

Potential Franchisees must read the Franchise Disclosure Document ("FDD"). The FDD is chock full of valuable information about the franchise system you are considering making a major commitment to, even if you are an experienced business person and even if you have great financial stability. The Franchisor is only required to make certain disclosures, so in reading the FDD, consider what is not being disclosed.  If you don't understand something contained in the FDD, both ask the Franchisor for clarification and ask your own independent professional franchise advisors, including an experienced franchise attorney.

 

Franchise Agreement:

The Tie That Binds

 

The Franchise Agreement ("FA") will be your contract with the Franchisee.  The vast majority of obligations on the parts of both Franchisor and Franchisee will be contained in that FA.  Just as with thte FDD, if there is anything you don't understand that is in the FA, both ask for clarification from the Franchisor and from your own independent professional advisors- especially the franchise attorney.  A franchise lawyer should be able explain the potential effects of each term in the Franchise Agreement.  Keep in mind, certain parts of the Franchise Agreement may be negotiable, especially with a newer Franchisor, or by a prospective Franchisee that is attractive to the Franchisor.

 

 

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