5 Steps to Starting a Franchise – Failure is Not an Option

• Work with your franchise lawyer to develop a Franchise Disclosure Document.

The International Franchise Association defines an FDD as a document that discloses information about the franchisor and franchise system to the franchisee. In the document, there are 23 sections covering everything from the franchisor’s history and finances to contracts and franchisee fees. Any franchise sale must comply with FTC rules, one of which is the filing of the FDD. This underscores the need to hire a lawyer with franchising experience: “You don’t want someone creating your FDD who is just learning [franchise] law for the first time,” says Andrew Sherman, lawyer and author of Franchising & Licensing: Two Powerful Ways to Grow Your Business in Any Economy (AMACOM; $45). “No matter what, those documents have to be right, or you’re subjecting yourself to federal and state penalties.”