Have you been wondering before why Franchise Disclosure Documents, aka "FDD", are not public? Do you deeply believe that these documents should be posted on each franchisor website? How many times did you have to fill out these lengthy forms to get your hands on one of these FDD documents? If it will make you feel any better, you are not alone there. If you are reading this post, then you are one of a very large crowd who lines up at the door of every big chain begging to get a copy of their FDD, and unfortunately franchisors know that and they are using it to their benefit. Franchisor are using this to lure candidate franchisees to fill out a form requesting this document, pre-qualify to the franchisor requirements "mainly minimum net worth requirement", and to hook them up with one of their franchise development representatives whose job is to sell you on the franchise concept and convince you how they are better than their fellow competitors, sounds familiar? Some franchisors take it too far and invite you to their Discovery Day where you get to meet the franchisor team who will meet you in person, interview you and if you fit their requirements will sell you even more on their franchise. All of this, which sometimes take weeks, before you are granted the honor of receiving this golden document and get a chance to learn more about the franchisor from someone who is not paid by the franchisor and does not earn a commission by bringing new franchisees to the business. The FDD provides you a different window on the franchisor business using, for the most part, bare facts and more objective view. By law, franchisors are required to tell you not only the good but also some of the ugly too about their business, including any law suits the franchisor has been involved in, an information I would not personally take lightly. Don't get me wrong, I am not an anti-sales by any means and I believe that businesses should find every possible way to attract new franchisees and paint whatever rosy picture they can paint about their business, but I also believe franchisees should have the right to investigate franchise opportunities at a much faster pace, without jumping through too many hoops and should have the opportunity to compare the FDD of all possible competing franchise concepts as they can get their hands on without having to spend hours and hours speaking to franchise development representatives and filling out pages and pages of forms disclosing every penny they have in the bank and every dollar they owe their mortgage company and their credit cards. Too many people are victims of this inefficient process but I have a good news for you, there are two states "California and Minnesota" that make these documents available, and guess what, online, up to date, downloadable in PDF format, and best of all FREE, yes you heard me right FREE, no subscriptions, no one time fee and no catch. Albeit not every franchisor, specially the little sharks, is registered in those two states, yet you will find a large number of them available on these state websites. I included the web addresses for these states franchise registries so you do not have to sweat trying to find them yourself, good luck in your journey! California Department of Business Oversight (DBO) Minnesota Commerce Actions and Regulatory Documents Search (CARDS)
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About the AuthorMostafa Ahmed is the founder and Managing Partner of Vertex Accounting Solutions. He has over 18 years of Financial and Business experience, his passion is to help his clients make the right business decisions, whether they are buying a franchise, starting a new business or managing a growing company. He specializes in financial reporting, budgeting and forecasting, contracts negotiation, franchise evaluation, mergers and acquisitions on both the seller and the buyer side and debt and equity financing. ArchivesCategories |