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Log In / Register | Jun 22, 2018

Deadline Nears for NASAA’s ‘Reasonable Basis’ Rule in Giving FDD Earnings Claims

Under the Federal Trade Commission Franchise Rule and applicable state franchise laws, franchisors are prohibited from making a financial performance representation, formerly known as an earnings claim, in their franchise disclosure documents (FDD) unless they have a "reasonable basis" for the representation at the time it is made.

Franchise Earnings Disclosures Help Deliver Franchise System Growth

Buying a franchise is about choosing a business that you can make money at. It’s that simple. Passion for the brand is great, but passion doesn’t put money in your pocket.

Franchisees to Regulators: Franchisors Must Disclose Franchise-Level Profits

Alexander Hamilton
Where's the money? Alexander Hamilton on $10 bill. (Photo: Sniegowski)

WASHINGTON, D.C.— A franchise buyer's most fundamental question is, "How much can I make with this business?" Obtaining a straight-forward answer to that question has been like finding the proverbial needle in a haystack.

Franchise Legal Tip: Financial Performance Representations

One aspect of my practice consists of reviewing franchise disclosure documents for prospective franchisees.  Recently I reviewed a franchise disclosure document for a small franchise system.

Cold Stone Creamery v. Lenora Foods

Don't believe financial performance representations made by the franchisor. And don't believe representations made by franchisees, either.