Are you working on a plan to franchise your business?

Are you working on a plan to franchise your business?

by Harold Kestenbaum
President at HLK P.C. Law Firm | Franchise Lawyer

If you’re working on a plan to franchise your business, you’re no doubt excited. You’re enthusiastic to share your knowledge, your experience and your systems, and you can’t wait to help your franchisee prospects start on the road toward their own achievements.

Naturally, your first thought is to open up the books and show just how much money franchisees can make. Many franchise experts would tell you to pull your balance sheet back and consider just how much information you want to put out there. As a franchise lawyer in N.Y., I would like to offer some insight on revealing your financials.

Benefits and drawbacks
On one hand, revealing your revenues can be a great way to entice and encourage prospects to consider your franchise concept. When you put the numbers down in black and white, however, you run the risk of interested parties falling in love with the numbers, instead of falling in love with your concept.

What the rules say
Keep in mind that the Federal Trade Commission has strict regulations regarding financial disclosures in the Franchise Disclosure Document, and actually recommends businesses stay on the safe side, and avoid disclosing financial information. Reach out to my franchise lawyer office in Melville, N.Y., to discuss Franchise Disclosure Documents.

Put the numbers in context
Revenue only tells one part of the story, so it is important to consider the impact it will have on a potential franchisees’ decision making. If you do decide to share revenue numbers, you may also consider including gross sales and making sure to call attention to the required investments and fees.

New to Franchising? Read our Franchise Legal Services for New Franchisors.

If you’re looking for a franchise lawyer, please visit my website or call me at (516) 745-0099.