Franchise Due Diligence Tip from Richard Solomon
Richard Solomon has a great due diligence tip for prospective franchisees, in his paper Franchise Remedies: MAKE YOURSELF LITIGATION PROOF WITH BETTER DOCUMENTS
Here is my summary of Richard's idea.
Before making any decision about a franchise,
1. Keep all the promotional material from the franchisor. Yellow highlight the representations that you thought were important to your decision making.
2. Write down what attracted you to the franchise, from the sales person and others. Focus on what they said about the earning's potential of franchise.
3. Ask a franchisee attorney whether the information in 1 and 2 is consistent with the Earnings Claim Item 19 in the disclosure document, or UFOC.
Any competent franchisee attorney should be able to answer this question in a short period of time.
In my opinion, a the whole exercise shouldn't cost you more than $500, and will likely save you hundred's of thousands of dollars.
You can even try the trick at home.
