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What types of payments should a franchisee expect to pay when starting a franchise?
Item 7 of the Offering Circular (the UFOC) is supposed to describe the total initial investment required to set-up and launch the franchise. Although the amounts described are generally a good indication of what the ‘business’ will cost to establish, I find fault with the general practice of ‘not’ discussing living expenses while building the business. While it is not necessarily the franchisor’s responsibility to advise buyers on this obvious expense, (and without an earnings claim to consider a time to break even or profit it is even less likely to be discussed), the franchisee often time does not consider the additional cash required to live during the initial phases of running a new business.