International Law

How not to investigate a Franchise.

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I continually see this bad advice about how to investigate a franchise system.

"After you have read the offering circular, ask the franchisor for a list of franchisees that you can contact.

Current franchisees are a great resource and can give you detailed insight on how the company is really doing, what to consider before and after you get into the business, and other critical information.

You should visit franchise stores and corporate headquarters to uncover any information that will help you make your decision.

Assemble a team of professional advisors, including a franchise attorney and an accountant. They can help you answer technical questions and will be a useful resource throughout the research process."

First, the franchise disclosure document contains the list of the current franchisees so there is no need to ask the franchisor for a list of franchisees to contact.

Second, what are you going to say to the the franchisees you contact? Why will they talk with you? What differences should you know about that exist between the 1st to3rd year franchisee and a longer term franchisee?

Third, when do you contact these franchisees? How, by mail, phone or fax? Do you know why it makes a difference?

In general, this type of advice is more than worthless because it is so misleading.

Full post as published by Misleading Advertising Law on October 22, 2008 (boomark / email).