How to Learn About a Franchise's Financial Performance

Under the rule, companies are required to include in their disclosures a list of the names, addresses, and telephone numbers of at least 10 recent purchasers who are geographically

closest to a potential franchisee, so that the person can obtain legitimate references. Armed with this information, you will be able to contact recent purchasers and ask them questions about the financial performance of the franchise you are considering.

The FTC does not require that disclosure statements be filed. Franchisors provide information to potential purchasers but are not required to file that information with the FTC. Thus, it is possible that only a potential purchaser would be able to obtain detailed information about a specific franchise.

If you are unable to obtain information from the FTC because you are not a potential purchaser of a franchise, it may still be possible to find the information if the franchisor has filed a UFOC. There are 15 states that require franchisors to provide presale disclosures. Most of these states will not provide copies of these disclosures, but may permit a review of the documents in person by appointment.