Do you ever think about buying a franchise? Maybe you’ve heard of big opportunities and want to make a career change or build a business. Before you go further, know this: a franchise is like all investments – there’s no guarantee it will succeed. That’s why it’s important to do research and talk with franchisees and expert advisors before you invest. If you’re considering buying a franchise, the FTC has updated information to help you.
A Consumer’s Guide to Buying a Franchise explains how to evaluate your finances, abilities and goals. You’ll find ideas for ways to shop for a franchise opportunity and key questions to ask. It also explains your rights. For example, under the FTC’s Franchise Rule, a franchisor must give you a Franchise Disclosure Document (FDD) before you pay any money or sign a contract. The disclosure document provides:
- legal and financial history of the franchisor and its executives
- the costs to start and operate the franchise
- the franchisor’s claims about sales, costs and profits
- contact information for current and former franchisees you can talk with
- the franchisor’s rules about ending or renewing a contract
