What if a Franchise Doesn't Disclose Financials?
The FTC regulations specifically allow franchises to make earnings claims as long as they follow the specified rules. The FTC revised the rules again in 2007, and now calls these financial performance representations instead of earnings claims. Even so there are five reasons why a franchise might not disclose financial performance representations to you. They include:
1. They're too new to have a record of unit operations; putting forth numbers would be premature and possibly misleading.
2. They don't feel like investing the time and resources required to compile the data.
3. They don't feel comfortable with the accuracy of the data; this might be due to the way numbers are reported at the franchise level. They would not want to put out numbers that could be challenged as misleading.
4. Their attorney told them not to due to risks of disclosure.
5. The numbers are low and make them look like a bad opportunity for investors.
When a franchise opportunity you are looking into doesn't disclose financial figures, you need to find out why they didn't. If the answer doesn't satisfy you, dig deeper until you are satisfied. Find out more tips for qualifying franchises at The Truth About Franchise Earnings.
If you live in North Florida and are considering buying a franchise, please contact Wood, Atter & Wolf, P.A.
