WHAT IS THE FRANCHISE PROCESS?
As part of the franchise process, you will be asked to sign a Franchise Agreement. When that time comes, you should not sign unless you are confident you understand and have assessed all the risks. After all, you will be making one of the biggest financial decisions of your life.
WHO READS THEIR FRANCHISE FDD?
A Franchise Disclosure Document, or FDD, is a long, complex and extremely subtle legal document carefully crafted by law firms hired by franchisors to act in the franchisor's best interests.
Unfortunately, FDDs often go unread by prospective franchisees. Many people choose to believe either (1) franchising is “safe” or (2) “I want to do it and they won't negotiate anyway” so why not just sign? Neither belief is a good basis upon which to potentially sacrifice a future.
KNOW BEFORE YOU SIGN!
The only time to negotiate franchise terms is prior to signing. Prior to signing is also the absolute best time to say “I do not understand this term” because if you have to ask later, it may be too late.
It's important to know that even though FDDs are required by the Federal Trade Commission to have a mandatory format, the FTC does not review or approve franchise offerings.
For a variety of reasons, including Franchise Agreements that are designed to eliminate or at least significantly thwart any attempt by the franchisee to sue the Franchisor, there are limited remedies for franchisee victims. When buying a franchise it really is “buyer beware.”