Just a quick post today…….
Yesterday I found a great article from earlier in July that Chris Myers from Forbes wrote. He takes a very practical and down to earth approach on how to review a Franchise Disclosure Document.
When we talk with potential franchisees and mention the Franchise Disclosure Document, for many it is the first time they have heard of such thing (we refer to it as the “FDD”). Every franchise is different, but generally, if you are looking into a franchise system you will get this fairly early on in the process. For most, this is the time when things start to get “real”. For the first time, they are seeing hard numbers of what it costs to open a business and there is a lot of detail on what it will take to run the business.
Overall, the document is written by lawyers. If you have ever read a document produced by lawyers, then you know what this means. If you don’t, then go read your mortgage and you’ll know exactly what I am getting at. Legal writing at times can look like literature from 17th century England.
However, this doesn’t make the FDD any less important. I can tell people get overwhelmed by the document because this is where we lose more people in our process than any other step. Out of the people that we do connect with after the FDD, I can tell about half didn’t read through the document.
What Chris does in the attached article below is going section by section and detail what is in it and how it should be read. While the document is typically only 40-50 pages long (not including the exhibits which push it well over 125 pages), I have often thought a guide to review it would be extremely helpful. Chris does exactly that. Whether with Monkey Bizness or another franchise, use the tool below to help with your due diligence.
https://www.forbes.com/sites/chrismyers/2018/07/08/how-to-read-a-franchise-disclosure-document/#2ecdc24533da
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