08 Sep, 2017

Franchise Legal Documents

Franchise legal documents If you have been shopping around for a franchise, or have attended any franchise expos in your research to select the perfect business opportunity for you, then you've come across a few Franchises legal Documents. If you are unfamiliar with what a franchise legal documents is, then now is your chance to get familiar, because these documents are a crucial source of information and should play heavily into your decision making process. All franchisors are legally required to provide a Fld prior to any sort of legally binding commitment between themselves and a potential franchisee. What is the FLD? A franchisor's franchise legal documents is a company outline, legally required to be written in "plain [easy to read and understand] English". This document provides a detailed overview of the franchising organization, its history and many specifics about its existing franchises. By law there are certain key facts that must be divulged by the FLD, regardless of how it may reflect on the franchisor. Information about the Franchisor Any FLD should contain a detailed overview of the parent company. Disclosed in the first few section of the FLD should be information regarding the company's history and the way that the corporate structure is laid out. These opening sections must also divulge any law suits against the parent company by franchisees, regardless of whether or not the outcomes were favorable for the company. If the company has ever filed for bankruptcy, that information must also be disclosed. This information is required by law so that potential investors can understand exactly what they might be getting into should they pursue a relationship with an unreliable or fiscally unsound company. Fiscal Information Legally, there are certain financial details that must be stated within the franchise legal documents this information includes franchising fees and start-up costs and other associated financial requirements for entering into a franchising agreement with the franchisor. Franchisors are not required to divulge any information that might be construed as a guarantee or even a speculation as to expect ROI. Doing so would make the franchisor vulnerable to lawsuits from failed franchisees. Importance of the FLD If you are even partially considering a franchising organization as a potential for your new business then you should request a copy of the company's FLD (if one hasn't been provided already) and read it. Then take the FLD and read it again. Once you've done that, take the FLD and read it a third time. That is how important this document should be to your decision making process. Read it, comprehend it, ask questions to the company's representative if you are unclear about anything in it, take it to your attorney and have him or her review it.