Thinking of Buying a Franchise?

Important Information Contained in the Franchise Disclosure Document

Author: Lewis Martin

Prior to investing in any franchise system, obtain a copy of the Franchisor’s Disclosure Document. Under the Franchise Rule, which is enforced by the Federal Trade Commission (FTC), you must receive the document at least fourteen (14) days before you are asked to sign any contract or pay any money to the franchisor or to any affiliate of the franchisor. You have the right to ask for a copy of the disclosure document once the franchisor has received your application and has agreed to consider it. Therefore it may be in your best  interest to get a copy of the franchisor’s disclosure document before incurring any due diligence expenses.

The franchisor may give you a copy of its disclosure document on paper, via email, through a web page, or on a disc. The cover of the disclosure document should have information about its availability in other formats. Make sure you have a copy of the document in a format that is convenient for you, and keep a copy for future reference.

As a general rule, you should read the ENTIRE disclosure document. Do not be reluctant to ask for explanations, clarifications, and/or answers to any of your questions.

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Categories: Franchise Sales


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