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The franchise is supposed to be a "goldmine." How can I tell?
If the franchiser is making claims you should ask for an earnings claim statement. It is an optional section of the FTC-disclosure document. There may be a statement providing for the inclusion of the actual, average, projected or forecasted income of the business owner.
While the franchiser is not obligated to give you this information, its failure or refusal to do so should raise a red-flag. If they are included, both the financial statement and the earnings claims statement provide crucial information necessary to evaluate the financial health of the company, selling you the franchise and projections of what you might expect from operating one of its franchises, before the purchase is made.
All earnings claims statements must be prepared according to an FTC-prescribed format and supply information with government-required disclaimers. |
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