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 [email protected]. If you enjoyed this interview, please leave us a review on iTunes.

 

Mentioned in This Episode:

[email protected]

www.franchiseeuphoria.com/franchise5