Buying a franchise can be quite an emotionally-charged experience. We all like to think that we make fact-based decisions on all of our major purchases, (like houses and cars) but the reality is that our emotions play a huge part in our choices.

If you’re getting close to a decision on becoming a franchise owner, congratulations; it takes a lot of courage to invest in a business of your own. I just want to make sure that you haven’t missed something.

I’m assuming that you’ve received a copy of the Franchise Disclosure Document. (FDD)

From the Federal Trade Commission’s, “Buying a Franchise: a Consumer Guide;”

“Under the Franchise Rule, which is enforced by the FTC, you must receive the document at least 14 days before you are asked to sign any contract or pay any money to the franchisor or an affiliate of the franchisor. You have the right to ask for-and get-a copy of the disclosure document once the franchisor has received your application and agreed to consider it. Indeed, you may want to get a copy of the franchisor’s disclosure document before incurring any expenses to investigate the franchise offering.”

FTC Consumer Guide

If you’ve been talking with a specific franchise company or two for a while, and you haven’t received the FDD, call them and find out why.

Once you do get it, read through it, and highlight the things that you have questions about or don’t understand. (The copy is yours to keep, so you can write on it.)

The FDD usually a couple hundred pages long, and includes 23 items that pertain to the franchise offering.

The FDD may be overwhelming, at first; there’s lots of information to digest. You’ll be using this information to help you decide on whether or not you want to move forward with the opportunity.

When it comes to understanding exactly what the information contained in the FDD means, as well as getting a handle on all of the legal intricacies contained in it, using the services of a competent franchise lawyer is always advised. (In other words, I’m advising that you do this.)

Caution; these days, it’s very tempting to find cheaper ways of doing things. For example, if you’re seriously considering franchise ownership, and you’re looking for some legal guidance, don’t call your Uncle Ralph, who was able to help you deal with your little fender-bender a couple of years ago, but never got around charging you for his time. (Unless your Uncle happens to be a franchise attorney!)

The FDD also includes the actual franchise contract, which is usually 20+ pages long, and filled with head-scratching legalese. A franchise attorney can save you time, money, and future headaches, since he or she is used to reading, and possibly even writing, FDD’s, and the franchise contract’s that are included in them.

In summation, please remember that when you buy a franchise, you’re also entering into a legal agreement, and it’s important that you understand that agreement, fully. Engaging the services of a competent franchise attorney will go a long way in helping you reach your dream of owning your own franchise.

(The Franchise King®, Joel Libava, provides advisory services for prospective franchise owners, and can be found online at http://www.thefranchiseking.com. His 1st book, Become a Franchise Owner!, is coming out in December.)

Joel Libava, The Franchise King, is frequently interviewed and quoted in national newspapers, magazines, major websites, blogs, and on radio and TV programs.
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