After getting off the call with the Franchisor, my client and I scheduled a next meeting to call Franchisees together. The FDD was sent to both my client and myself. We began reviewing the website and materials that the franchise provided. The Franchisor overnighted the FDD (Franchise Disclosure Document) so that we would have it before our next meeting which was just a couple days away.
We received the FDD in perfect timing. We immediately signed and sent back the receipt; we do this so that the franchise can stay compliant. Franchises are required by the FTC to have a signed acknowledgment or “receipt” that identifies when the prospective Franchisee received the FDD. The receipt must be sent back to the franchise and held for a minimum of 14 days before the prospective franchise buyer is even allowed to purchase the franchise. The FTC does this to ensure the prospective Franchisee is given enough time to do their proper due diligence before making this life changing purchase. From what you learned earlier in this case, you understand that all franchises are not created equal and some have a much higher chance of success than others. Good Franchise Consultants can help you identify the difference.
Once received, I read the FDD and highlighted any areas of caution that I saw and wanted to bring up to the Franchisor and our franchise attorney. This process only took me a few hours because I am skilled at reading FDDs and have been properly trained on what to look for in the FDD. As a Consultant I do not give legal advice, our attorneys do that, however I do have the responsibility to protect my client and I intend to do that. After reading the entensive document I was prepared for the next meeting with the client.
