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Part 2 cover the Franchise Disclosure Document, why they exist and how to use them as a tool to make a smart decision on which franchise is right for you.
Citation preview
Understanding Franchising
Part 2
Presented by:Marvin L. Storm
Review: Types
• Extreme Entrepreneurs• Innovator Entrepreneurs• Founder Entrepreneurs• FranPrenuer
Review: What is• Licensing Concept vs. Buying
Review: Benefits• Brand• Valuation at exit• Learning curve reduced• Technology• Marketing• Support• Systems are a significant
competitive advantage
A Brief History of Franchising
Two Type of Franchise Business Models?
- Trademark Franchising
- Business Format Franchising
- History of Franchise Regulations The McDonald’s Story Fraud & Abuse in Franchising
UFOC in 1972-1978
FDD adopted in July 2009
Franchise Disclosure Documents
Franchise Disclosure Document Discussion
______
Understanding the Document, Its History and
How to Use It
Franchise Disclosure Documents
Our Discussion on the Franchise Disclosure Documents Will Be
Done in Four Discussion:________
1.Overview of the Disclosure Docs2.A Brief History of Franchising3.The Disclosure Section4.The Franchise Agreement
• What is the Franchise Disclosure Document?
Three Parts to the FDD
1) The Franchise Disclosure2) The Franchise Agreement3) The Exhibits
Guarantees, General Release, Confidentiality Agreement, Consent To Transfer, Financial Statements, State Addenda To the Disclosure Document, Operations Manual - Table Of Contents
Franchise Disclosure Documents
• What is the Franchise Disclosure Document?
• Why is the FDD required?
Franchise Disclosure Documents
• What is the Franchise Disclosure Document?
• Why is the FDD required?
Franchise Disclosure Documents
• Three Things to Understand about the FDD?
1) The intent of the FDD is to provide any and all information that the Federal Trade Commission and your State Regulators believe you need to know to make an informed business decision.
Franchise Disclosure Documents
Three Things to Understand about the FDD?
Franchise Disclosure Documents
Three Things to Understand about the FDD?
2) Use it to gain an understanding of the creditability of the franchisor management team, the financial terms for start up, ongoing fees and how the franchisor protects the brand.
Franchise Disclosure Documents
Three Things to Understand about the FDD?
3) Gain an understanding of the contractual obligations of both parties and how the franchise system works.
• Intent
• Team, financial terms, fees and brand protection
Review: Key Understandings About the FDD
• Obligations and how the system works
Questions???