Read this tip to make your life smarter, better, faster and wiser. LifeTips is the place to go when you need to know about Components Of The UFOC and other Franchise topics.
The prospective franchisee will ask about earnings and profit. Legally, you cannot guarantee any level of earnings. If you do, and the franchisee does not achieve that level, there are going to be legal battles. It is, however, a fair question and Item 19 of the Uniform Franchise Offering Circular (UFOC) gives you a place to address it.
First, you want to emphasize that you do not furnish or authorize your salespeople to furnish ANY oral or written information concerning the actual or potential sales, costs, income or profits of a store. Further, you note that actual results vary from unit to unit and that you cannot estimate the results of any particular franchise. You clearly state that you will not be bound by allegations of any unauthorized representation as to earnings, sales, profits or prospects or changes of success.
You may, however, give a prospective franchisee actual operating results of a unit they may be interested in purchasing. For new franchise units, you may suggest the potential franchisee contact existing franchisees and ask them candid earnings questions.
|Jennifer Mathes, Ph.D.|