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 As you know by now,
franchise consultants and franchisors will not project
income as this is in violation of the Franchise Rule. So
how do you find out? This is where a franchise consultant
can be of great value to you as your coach. Our franchise
consultants are trained to help you ask the right
questions.
We have found there are three excellent sources for this
information.
- Franchise Disclosure
Document (FDD). Item 19 – Financial Performance
Projections is where about 10% of all
franchisors disclose how their franchisees are doing. It
is great when this occurs, but 90% don’t for a variety
of reasons which are valid. In Item 7, your franchise
consultant will be able to show you how to estimate the
capital you will need to get started. The FDD will also
contain audited and non-audit financial statements of
the franchisor, which your CPA and franchise consultant
can show you how to glean key information.
- Interviews with
Existing Franchisees. Likely, your best source of
information. Our franchise consultants are trained and
can suggest a series of questions you should ask of
mature and new franchisees about how the franchisor
operates the franchise, support, income expectations,
cost of goods, etc.
-
FranTrends.com. and
other websites. We are excited about how the Internet
can help you do your due diligence. There are several
websites you can find out information about franchisors.
In particular, we like
FranTrends.com and their
Verification Reports. These reports are a nice summary
provided by this news website to help consumers learn
more about franchising. Currently, in its early phases,
we expect to see new franchisors appear monthly.
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is a simple easy to use Royalty Collection Tool for
Franchisors. It provides franchisors with a
low-cost branded solution for payment collection.
