Franchise businesses are a wonderful way for professionals to build thriving small businesses, but there are some icebergs out there potential franchise owners need to avoid.
Here are four:
Failure to absorb the FDD
It’s baffling to think that a franchisee would invest thousands of dollars in a business venture without knowing what he or she was getting into — especially when the law requires franchisors to disclose detailed information about operations, costs, earning potential and legal requirements.
But it happens. People get so excited about their business venture that they don’t read the Franchise Disclosure Document, or just read the Item 7 expenditures and Item 19 earnings information and skip over the rest. Then they’re caught by surprise later when it’s too late. (more…)