Every franchise buyer wants to know how much money they will make if they buy into a particular franchise business opportunity. Unfortunately, every company that competes with a franchising business also wants to know exactly how much each of its franchised outlets are earning each year.

In fact, since many franchising companies are not public companies and therefore the information on same-store outlet earnings are not available, their competitors will often find a way to get a look at their franchising disclosure documents in hopes that all the financial information of this type will be there. Sometimes it is, but because of this, many private franchising companies have chosen not to give earnings claims.

Should a franchise buyer that desperately wishes to know the profitability of a franchise investment opportunity shy away from those franchising companies that do not share earnings claims in their franchise disclosure documents? Well, it depends, if the franchise buyer thinks that the company offering the franchise opportunities for sale is hiding something then, yes!

But, the franchise buyer should also realize that there are indeed other ways to obtain such information, such as talking to current franchisees, and it is required that franchisors provide a list attached to the franchise disclosure documents of each current franchised outlet or franchise unit.

There is one other reason that franchisors do not post their franchised outlet’s earnings. If they do they have to audit each franchisee, something that franchisees do not appreciate as it is adversarial and kind of like Big Brother. So, as a franchisee once you do buy, you might be very glad that the franchisor does not audit your books, thus, no earnings claims to new franchise buyers is a good thing.

Plus, as a franchise you do not have to worry about your franchise outlets financial information getting into the hands of competitors. Something you definitely don’t want. So, please think on this when considering purchasing a franchise business opportunity for sale.

-----------------------
Further Reading
FTC Regulations About Earning Disclosures
How Much Money Can You Make from a Franchise?
Verbal Promises During Franchise Sales Process Pondered
Answering the Knock of a Business ‘Opp’
Seven Secrets to Buying a Franchise

This entry was posted on Tuesday, November 25th, 2008 at 7:07 pm and is filed under Franchise Articles. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.