Key Takeaways:
[0:22] Josh introduces the show as a solo episode.
[0:34] One of the most important things for franchisors to get right is the Item 19 section of the Franchise Disclosure Documents.
[1:08] Item 19 includes a franchisor’s financial performance representation.
[1:30] Several years back, franchisors didn’t provide financial performance representation out of fear that it would be misinterpreted and lead to false accusations. However, this has changed over time.
[2:15] One of the biggest questions a franchisee can ask is “how will this business do financially?”
[3:37] To lay the foundation for a strong franchise system, you will have to provide your prospective franchisees with a fair representation of what the opportunity is from a financial perspective.
[4:30] When creating or revising your Item 19, you have to be aware of the difference between corporate owned stores and franchised locations.
[5:35] The key is finding the balance between being transparent while not being misleading.
[6:10] Under the new franchise guidelines, you can categorize your different outlets, but you have to do so in a fair and responsible way.
[7:25] If you can come up with an Item 19 that gives a global representation of your franchise system, which may mean including the bad locations too, you can overcome a lot of the objections many franchisees have.
[8:15] You should revisit your Item 19 on an annual basis so that it is consistently updated.
[9:05] As one of the most highly litigated items in franchising, be sure that you always consult a franchise professional before revising or drafting an Item 19.
[9:35] Thanks for listening, and please, reach out to Josh anytime through email at josh@franchiseeuphoria.com. If you enjoyed this interview, please leave us a review on iTunes.
Mentioned in This Episode:
www.franchiseeuphoria.com/franchise5
