Legal Information Notice: This checklist provides general educational information only. It is not legal advice, does not create an attorney-client relationship, and may not apply to your jurisdiction or circumstances. Laws and deadlines vary. Do not rely on this checklist for a specific legal decision or deadline; consult a qualified attorney licensed in the relevant jurisdiction.
“You’re not just buying a business—you may be agreeing to an entire operating system.”
The FTC Franchise Rule requires franchisors to provide prospective franchisees with a disclosure document containing 23 specified categories of information.
25 Buyer-Beware Warnings
- ☐ Obtain the current franchise disclosure document.
- ☐ Don’t rely solely on the sales presentation.
- ☐ Review all 23 disclosure items.
- ☐ Investigate franchisee turnover.
- ☐ Contact current franchisees.
- ☐ Contact former franchisees.
- ☐ Review fees.
- ☐ Review royalties.
- ☐ Review advertising fees.
- ☐ Review territory.
- ☐ Review renewal rights.
- ☐ Review termination rights.
- ☐ Review transfer restrictions.
- ☐ Review required suppliers.
- ☐ Review purchasing restrictions.
- ☐ Review earnings claims carefully.
- ☐ Review litigation disclosures.
- ☐ Review bankruptcy information.
- ☐ Model realistic startup costs.
- ☐ Model working-capital needs.
- ☐ Verify state-specific requirements.
- ☐ Have an independent franchise attorney review the agreement.
- ☐ Don’t use the franchisor’s lawyer as your own lawyer.
- ☐ Model the downside case.
- ☐ Don’t confuse brand recognition with unit economics.
Premium Checklist
Disclosure → Economics → Franchisees → Territory → Contract → Operations → Exit → Downside