Getting Started  |  Strategy  |  Validating  |  Purchase  |  Directory

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.

1. 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.
2. 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.
3. 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.