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Posts Tagged ‘Franchise Disclosure Document’

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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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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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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Item 19 of the Franchise Disclosure Document (FDD)

ITEM 19 OF THE FRANCHISE DISCLOSURE DOCUMENT (FDD) Background On New NASAA Guidelines to Item 19 of the FDD New guidelines for Item 19 of the Franchise Disclosure Document (FDD) on Financial Performance Representations (FPRs) will benefit franchisors, franchisees and sales consultants. These new guidelines go into effect early in 2017 (http://www.nasaa.org/40282/notice-request-comments-regarding-proposed-franchise-commentary-financial-performance-representations/).  The new guidelines are…

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Buying an Existing Franchise Business

Frequently I am contacted by someone who is not only investing in a franchise opportunity, but also simultaneously buying an existing business that is part of that franchise.  If you are in that situation, it is important to realize that there are two facets of this situation that are both important to evaluate. First, you…

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Should You Franchise Your Business?

Deciding on the Terms of Your Franchise Once you have decided to start a franchise business, you have a number of decisions to make, such as: What should be the amount to charge for the initial franchise fee and royalty payments Which companies will be authorized suppliers What advertising fees, should you charge to franchisees…

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