Not long ago, a young lady in my local area called me up and wished to talk with me about a franchise that her and her husband were considering on buying. Apparently, one of our mutual friends had mentioned that I was a former franchisor founder of my own franchising company and now retired living in the same community. Indeed, I agreed to meet them at the local Starbucks and ask them to bring all the paperwork. What the heck, a free cup of coffee and a chat on franchising I thought.
Unfortunately, what they brought me was all the brochures, and marketing material. They did not bring me The Franchise Disclosure Documents or FDDs. This is the new version complying with the new franchise rule of the Federal Trade Commission for the old UFOCs or Uniform Franchise Offering Circular. Generally, these franchise agreements and disclosure documents are in excess of 250 pages. Luckily, they’re required to be written in plain English and not legalese, and I was rather shocked, and surprised that the gal and her husband did not bring in the legal paperwork.
Indeed, I’ve seen all kinds of marketing material from franchisors, as I’ve been to all the tradeshows, read all the magazines, looked at all the ads, and been to all the websites. Back in my franchising day the Internet was just getting going, so most all of our marketing material was in paper brochure form, not only have I seen a ton of these brochures in the past, I’ve actually designed and created some myself. Yes, I knew exactly what to look for, and I read through all the hype.
Interestingly enough, I did know a little bit about their business model, and I’d heard about the franchisor before. When I asked the gal if she had the legal agreements, she said she did, but she also said: “I don’t really care about the legal agreements, I am sure they are fine,” and I told her; “you had better care about those legal agreements because if you sign them are obligated to all the stipulations within those legal agreements for the next 10 years of the franchise term.”
Besides all the information I really needed to assist them was in there, and I knew where to find it. Anyway, a lesson learned. Please listen to me when I tell you; you need to have those legal franchise documents looked over by a franchising attorney. This is serious stuff. I hope you will please consider this.
Lance Winslow is a retired Founder of a Nationwide Franchise Chain, and now runs the Online Think Tank. Lance Winslow believes in franchising.
