Communicating A Franchisor’s Value Without Crossing The Line

The best way to avoid fraud claims when communicating a franchisor’s value is for the franchisor to put itself in the franchisee’s shoes and disclose to prospective franchisees what it would consider material if it were deciding to buy the franchise.

Franchising World magazine:

Franchisees invest a substantial amount of time and money into buying a franchise. In return, they expect franchisors to provide value, such as a high return on their investment, brand recognition that will attract customers, training, advertising, marketing, and other operational assistance.

One way or another, almost every franchisor-franchisee dispute has, at its core, a contention by the franchisee that it is not getting the value that it expected to receive when it purchased the franchise. Too often the seeds of a future dispute are planted when the franchisee walks away from the franchise sales process with expectations of value that the franchisor cannot deliver.

Making Financial Performance Representations… read more.