Franchise Attorney Superior WI
How Much Money Can You Make as a Franchisee?
When looking into a franchise opportunity, one of the toughest pieces of information to get from the franchisor is how much money you might make.
This can be frustrating because you’re not going to invest in a business until you have a good idea of what you can earn. But in most cases the franchisor isn’t being purposely difficult.
The Federal Trade Commission and many states stringently regulate how franchisors can provide this information to prospective franchisees. But there are still ways to get this essential information.
Why is the government regulating franchisors?
There were many instances of abuse early in U.S. franchising history, particularly making unjustified or misleading earnings claims to sell franchises. Congress passed legislation in 1979 authorizing the FTC to regulate the franchise industry and try to stop bad practices. A number of states joined in.
Current FTC and state rules don’t forbid franchisors from giving earnings information to potential franchisees, but they do regulate how it can be done.
It must be put in writing in a Uniform Franchise Offering Circular (UFOC). The data must be accurate, not misleading, and any assumptions or qualifications must be clearly labeled as such.
Assuming it meets the legal requirements, a franchisor is free to provide whatever earnings information they want about sales, expenses, cash flow and income.
Author: Lori Kiser-Block
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