Terry Powell, founder of The Entrepreneur’s Source® helps aspiring franchisees tackle Franchise Disclosure Documents
Decoding the language and structure of Franchise Disclosure Documents (FDDs) is one of the most difficult challenges facing any aspiring franchise owner. Even if these franchise prospects pursuing alternative careers that allows them to take control of their lives, have experience with franchise terminology and legal documents, full-scale FDD reviews can still be difficult and intimidating. And regardless of any prospect’s comfort level, reviewing any FDD without the help and support of a franchise coach who has spent decades in the franchising space is downright dangerous, as the chance of selecting the wrong franchise opportunity is infinitely more likely.
To help franchise prospects take a more strategic approach to the FDD review process, we asked franchise thought leader, Terry Powell, to provide us with five quick tips for getting started. Few leaders in franchising are better equipped than Terry to share these insights as he is the man responsible for building The Entrepreneur’s Source®, the leading national franchise coaching company that is devoted to helping franchise candidates find powerful alternative careers through franchising, from the ground up for more than 30 years.
Terry Powell’s Top 5 FDD Tips for First-Time Franchise Candidates
1. Expect Unknowns
FDD’s can be daunting. You need a skilled guide. Work with a franchise coach to learn the difference between the actual FDD section and Exhibit of the Franchise Agreement
2. The Franchise Agreement is What Counts
Remember that the only binding document if/when you become a franchisee is the Franchise Agreement, not the FDD in its entirety. The FDD only summarizes certain provisions in the Franchise Agreement.
3. Take Time to Analyze Mission Critical Items
Focus your attention on items 1, 7, 12, 19 and 21 in the FDD as they describe mission critical components of the franchise opportunity, including the brand’s history and leadership team, required initial investment and the financial performance representation.
4. Always Ask Yourself, “What am I missing?
The key to successfully reviewing the Agreement is asking yourself, “What are my rights and obligations if I enter this agreement?” A franchise coach can help you answer that important question.
5. Under No Obligation
Understand that being asked to sign a receipt for an FDD does not bind you or obligate you to proceed with the investment.
If you have any questions regarding any of these tips or any other franchise matter, contact an alternative career coach at The Entrepreneur’s Source® franchise today. E-Source coaches can provide you the leadership and guidance that you need to help you uncover if an opportunity may be the right fit for your goals and aspirations. For more information on how a coach can help you better evaluate franchise opportunities, contact a coach today. https://entrepreneurssource.com/blog/contact/