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Posts Tagged ‘FDD’

Definitions of Franchise Terms

What are the definitions of franchise terms that you should know before investing in a franchise?  Here are the definitions of the franchise terms that we believe are essential to know before you move forward in the franchise world. DEFINITIONS OF KEY FRANCHISE TERMS: FRANCHISOR The franchisor is the company that will be licensing their…

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Buying An Existing Franchise – A Two Step Process

What Are The Two Steps To Buying An Existing Franchise Business? When you are buying an existing franchise business it is a two step process. A person must evaluate both the franchise investment opportunity (the franchisor/franchisee relationship) and the existing business opportunity (the seller/buyer transaction). This involves two very different steps that need to be…

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What Is A Franchise Earnings Claim?

DEFINITION OF A FRANCHISE EARNINGS CLAIM What is a franchise earnings claim? As a prospective franchisee, you want to know how much money  you can expect to generate from the franchise business in which you are investing.  A franchise earnings claim is any information provided to a prospective franchisee that allows that individual to predict…

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Which States Are Franchise Registration States?

If you are a new franchisor, you must be aware of not only the federal franchise law that requires disclosure of certain information to a prospective investor in a franchise, but you must also be aware of state franchise laws.  You must know which when you are required to register a Franchise Disclosure Document with…

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What Is The Difference Between a License and a Franchise?

What is the difference between a license and a franchise? Many people confuse a trademark license and a franchise.  Even attorneys who are not experienced in the niche area of franchise law may find it confusing to differentiate between a trademark license and a franchise. Hopefully this article will help to clarify the difference. TRADEMARK…

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FOUR STEPS TO VALIDATE A FRANCHISE OPPORTUNITY

Before you invest in a franchise opportunity, it is important to take the following four steps to validate the franchise opportunity: CALL FRANCHISEES THAT ARE IN THE SYSTEM This is an important initial step in validating a franchise opportunity.  The franchisees that are in the system already (and any that have left the system) are the…

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Top 10 Questions To Ask When Buying A Franchise

What Are The Top Ten Questions To Ask When Buying A Franchise? I always recommend that individuals looking to buy a franchise ask several questions.  The first step to validate a franchise is to speak with existing franchisees of that system before moving forward. Franchisees that are already in the system and operating the business…

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New Accounting Rule ASC 606 Will Greatly Impact Franchisors and Consultants

Rule ASC 606 The Financial Accounting Standards Board (FASB) and the International Accounting Standards Board recently jointly issued rule ASC 606 known as “Revenues From Contracts With Customers”.  ASC 606 has the potential to dramatically change the franchise industry.  In a nutshell, this new rule governs when the franchise fee can be recognized (from an accounting…

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What Is Florida Senate Bill 750?

BACKGROUND Florida Senate Bill 750 has taken one step closer to becoming law.  Known as The Protect Florida Small Business Act, Florida Senate Bill 750 would greatly impact both franchisors and franchisees doing business in Florida.  Senate Bill 750 would change the current law in Florida to protect franchisors from terminating or failing to renew…

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Franchised Business vs Independent Business Ownership

Statistics Many articles have been written on the success of owning a franchised business vs an independent business.  Years ago an article appeared on About.com stating that franchised businesses have a success rate of about 90% as compared to starting a new business, which had a success rate of only 15%.  The article argued that…

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What Is The Difference Between The Franchise Disclosure Document And The Franchise Agreement

What is the difference between the Franchise Disclosure Document and the Franchise Agreement?  The Franchise Disclosure Document is a large document comprised of several federally mandated components, which include the Franchise Agreement.  The Franchise Disclosure Document is required to have twenty-three disclosure items, all contracts that the franchisee will be required to sign, financial statements…

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