Terminations

The disclosure document tells you the conditions under which the franchisor may terminate your franchise and your obligations to the franchisor after termination. It also tells you the conditions under which you can renew, sell, or assign your franchise to other parties.

Training and Other Assistance

The disclosure document will explain the franchisor's training and assistance program. Make sure you understand the level of training offered. The following checklist will help you ask the right questions.

• How many employees are eligible for training?
• Can new employees receive training and, if so, is there any additional cost?
• How long are the training sessions?
• How much time is spent on technical training, business management training, and marketing?
• Who teaches the training courses and what are their qualifications?
• What type of ongoing training does the company offer and at what cost?
• Whom can you speak to if problems arise?
• How many support personnel are assigned to your area?
• How many franchisees will the support personnel service?
• Will someone be available to come to your franchised outlet to provide more individual assistance?

Advertising

You often must contribute a percentage of your income to an advertising fund even if you disagree with how these funds are used. The disclosure document provides information on advertising costs. The following checklist will help you assess whether the franchisor's advertising will benefit you.

• How much of the advertising fund is spent on administrative costs?
• Are there other expenses paid from the advertising fund?
• Do franchisees have any control over how the advertising dollars are spent?
• What advertising promotions has the company already engaged in?
• What advertising developments are expected in the near future?
• How much of the fund is spent on national advertising?
• How much of the fund is spent on advertising in your area?
• How much of the fund is spent on selling more franchises?
• Do all franchisees contribute equally to the advertising fund?
• Do you need the franchisor's consent to conduct your own advertising?
• Are there rebates or advertising contribution discounts if you conduct your own advertising?
• Does the franchisor receive any commissions or rebates when it places advertisements? Do franchisees benefit from such commissions or rebates, or does the franchisor profit from them?

Current and Former Franchisees

The disclosure document provides important information about current and former franchisees. Determine how many franchises are currently operating. A large number of franchisees in your area may mean increased competition. Pay attention to the number of terminated franchisees. A large number of terminated, cancelled, or non-renewed franchises may indicate problems. Be aware that some companies may try to conceal the number of failed franchisees by repurchasing failed outlets and then listing them as company-owned outlets.

The following checklist will help you ask current and former franchisees such questions as:

• How long has the franchisee operated the franchise?
• Where is the franchise located?
• What was their total investment?
• Were there any hidden or unexpected costs?
• How long did it take them to cover operating costs and earn a reasonable income?
• Are they satisfied with the cost, delivery, and quality of the goods or services sold?
• What were their backgrounds prior to becoming a franchisee?
• Was the franchisor's training adequate?
• What ongoing assistance does the franchisor provide?
• Are they satisfied with the franchisor's advertising program?
• Does the franchisor fulfill its contractual obligations?
• Would the franchisee invest in another outlet?
• Would the franchisee recommend the investment to someone with your goals, income requirements, and background?