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Disclaimer
A Consumer Guide to Buying a Franchise
- Terminations
- The disclosure document tells you the conditions under which the
franchisor may terminate your franchise and your obligations to the
franchisor after termination. It also tells you the conditions under
which you can renew, sell, or assign your franchise to other parties.
- Training and Other Assistance
- The disclosure document will explain the franchisor's training and
assistance program. Make sure you understand the level of training
offered. The following checklist will help you ask the right questions.
- How many employees are eligible for training?
- Can new employees receive training and, if so, is there any additional cost?
- How long are the training sessions?
- How much time is spent on technical training, business management training, and marketing?
- Who teaches the training courses and what are their qualifications?
- What type of ongoing training does the company offer and at what cost?
- Whom can you speak to if problems arise?
- How many support personnel are assigned to your area?
- How many franchisees will the support personnel service?
- Will someone be available to come to your franchised outlet to provide more individual assistance?
The level of training you need depends on your own business experience and knowledge of the franchisor's goods and services. Keep in mind that a primary reason for investing in the franchise, as opposed to starting your own business, is training and assistance. If you have doubts that the training might be insufficient to handle day-to-day business operations, consider another franchise opportunity more suited to your background.
- Advertising
- You often must contribute a percentage of your income to an
advertising fund even if you disagree with how these funds are used. The
disclosure document provides information on advertising costs. The
following checklist will help you assess whether the franchisor's
advertising will benefit you.
- How much of the advertising fund is spent on administrative costs?
- Are there other expenses paid from the advertising fund?
- Do franchisees have any control over how the advertising dollars are spent?
- What advertising promotions has the company already engaged in?
- What advertising developments are expected in the near future?
- How much of the fund is spent on national advertising?
- How much of the fund is spent on advertising in your area?
- How much of the fund is spent on selling more franchises?
- Do all franchisees contribute equally to the advertising fund?
- Do you need the franchisor's consent to conduct your own advertising?
- Are there rebates or advertising contribution discounts if you conduct your own advertising?
- Does the franchisor receive any commissions or rebates when it places advertisements? Do franchisees benefit from such commissions or rebates, or does the franchisor profit from them?
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_________________________________ Table of Contents The Benefits and
Responsibilities Before Selecting
a Your Ability to Training
and Support Services Investigating
Franchise Terminations
Training Current and
Former
Source: Federal Trade Commission
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