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What legal obligations do franchisors have to their franchisees?
The ‘franchise agreement’, normally associated with the Uniform Franchise Offering Circular (UFOC), which will be replaced in July by the Franchise Disclosure Document (FDD), is part of the disclosure paperwork issued by a franchisor. While buying a franchise is a very serious decision, and while franchise due diligence “should be” a critical part of the process, it is most often overlooked or discounted in importance by the buyer.
Frankly, I think that, unfortunately, many prospective franchisees just do not want to challenge the franchisor or the sales people they encounter along the way to obtain more information. Perhaps they think that too many questions might disqualify them from buying their franchise of interest. That is NOT the case at all, but it’s an easy trap in which to be caught. Prospective franchisees simply do NOT understand that they are the most powerful element in the equation. THEY represent growth, but they also neglect their personal responsibility to obtain qualified counsel and franchise due diligence services.