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Financial Performance Representations

A good primer article on FRP (Financial Performance Representations) was posted by attorney Gary Duvall from the law firm Dorsey & Whitney LLP. He believes that two trends may increase the percentage of franchisors who will be using financial performance representations in the FDD:

  1. the general availability of cost-effective financial reporting software that communicates easily between franchisee and franchisor
  2. the new FTC Rule allows more information to be given to prospective franchisees outside Item 19 of the FDD.

Why, in Duvall’s opinion, don’t more than 25% of franchisors provide earnings claims? He gives three reasons:

  1. Lack of reliable financial data
  2. Variability of financial results due to each unit’s local business environment
  3. “Sell the Sizzle”, meaning unit results are likely lower than potential franchisees’ expectations

On a side note, one representative I spoke from an Arizona-based BBQ franchisor stated that he did not believe earnings claims were good for franchisees because they discouraged the franchisee from doing research.  I believe he was right in that providing an abundance of information and financial results may lessen the overall research done by a franchisee.  I don’t believe that is the primary reason these executives decided not to disclosure FRP.

Back to the article…Duvall adds:

if a franchisor has reason to know that franchisee profitability is extremely low, for example, that few if any franchisees are profitable, or that most franchisees will probably close in the near future, non-disclosure of these problems as a risk factor arguably violates the duty to disclose all material facts, although this is a grey area of the law.

About Ryan Knoll

Attorney and advisor with an interest in franchising. Feel free to email me comments and questions on the "Contact Us" page.

20 comments

  1. Interesting comment about the grey area of the law and non-disclosure of material information.

    If a franchisor knows that the unit performance statistics will not paint a pretty picture for a new buyer, he will, of course, opt not to disclose “earnings” or any historical performance statistics to new buyers of the franchise, and will take his chances that the “grey area” of the law is not as serious a threat to his survival and profits as disclosure of “earnings” would be.

    However, I think Margaret E. Narodick in her Internet Article, Fundamentals of franchising, Franchise Regulation, Disclosure and Registration Issues, (re: earnings claims) probably gets it right when she says: “There is no “safe harbor” afforded the franchisor’s compliance efforts. This is one of the principle reasons that most franchisors have chosen not to make earnings claims, and, therefore, include a negative disclosure in their Item 19, as required by the Guidlines (e.g. the franchisor does not furnish, or authoize othes to furnish, oral or written earnings claim-type information).

    If franchisors are not mandated to leave their safe harbor, they won’t. I would imagine even fewer franchisors will disclose “earnings” under the new Rule.

    Carol

  2. “I would imagine even fewer franchisors will disclose “earnings” under the new Rule.”

    I do not see how you have come to that conclusion. If anything, the new Rule makes it easier, as there no longer is a requirement that the claims be based upon GAAP. I would suggest the primary motivation for zors not to provide financial performance representations, whether under the revised or old FTC rule, is the zor’s increased liability exposure for those zees that do not perform to such representations. Item 19 is simply a double-edged sword for the zor.

    The zees that do not make what is represented will more than likely sue the zor for misrepresentation – thus from strictly a liability perspective, it makes sense not to include such representations. Yes, Item 19 figures (provided they are good) are great from a sales/marketing perspective, but not necessarily so from a liability perspective. Obviously not all claims against the zor for misrepresentation re: Item 19 will have merit, but the zor will have to expend resources proving that this is in fact the case – I do not see that their omission, so long as you explicitly provide that you will not be providing such representations, is misleading. Does it provide less information for the zee to make an informed decision – possibly yes, however, I think the zor has valid and reasonable justifications for any such omission.

  3. Bubba Logic?

    Obviously, since the franchisors have 100% protection from claims of fraudulent inducement to contract when they make NO representions of success or profits in their FDD’s, the new Rule isn’t going to change anything, and even more franchisors will not leave their “safe harbor” because if they can’t and don’t back up their earnings claims with material facts, they will open themselves, as you say, to charges of misrepresentation from those franchisees whose expectations because of the “false” earnings were not realized.

    The Franchisors can now use the Internet to advertise and hype and sell their franchises and as long as the majority of franchisors do not provide “earnings claims” the FDD continues to act as cover to protect them post-sale from charges of fraudulent inducement to contract as well as from non-disclosure of material information to new buyers of franchises. The fact that the majority of franchisors don’t disclose “earnings” allows these franchisors to imply that if “earnings” information were MATERIAL, the government would require them to disclose this information, etc…The potential franchisees then act on the pre-sale representations of the franchisor concerning the value and success of the franchise and don’t realize until too late and after they have signed the contract that they haven’t received any information whatsoever in the FDD concerning unit performance of the system. Franchisees will continue to be shocked when they realize that they were “tricked” into signing the franchise agreement with no disclosure as to the actual risk of the investment in terms of material facts concerning unit performance.

    Only, if the FTC MANDATES “earnings claims” will franchisors provide this information to new buyers of franchises. The bottom line is that all franchisees are required to indicate that the franchisor has promised them NO success or profits in the signed franchise agreements and the FDD and the signed Contract protect the franchisors against charges of fraud in the courts, as well as “encroachment” and “churning” post-sale in the relationship.

    The Franchisors will NOT leave their SAFE HARBOR unless forced to do so by government because their attorneys will tell them this is not in their best interests. Even more franchisors will not disclose under the provisions of the NEW Rule. —-Want to bet!

    Carol

  4. You have entirely too many assumptions in your response.

    You assume that zors have 100% protection – there is no hermetic seal against liability – zors do the best as they can, as much as anyone else does.

    You assume that any earnings are “false” – on what basis are you making this assumption.

    You assume that zors can now use the internet (as if this is a new concept)- they have been using the internet since Al Gore laid down the first tubes.

    You assume that the fact that most zors do not provide Item 19 disclosures that this implies anything, much less that these disclosures are not material because they are not mandated by the FTC – please substantiate this claim by something other than regurgitation of your previous arguments claiming it is “obvious.”

    You assume that because some zees don’t realize until after they have signed a franchise agreement that they have not been provided any unit performance statistics is the fault of the zor – this is obviously a zee oversight; if you do not know that what you are signing includes or does not includes certain information, then would appear to be your problem.

    You assume that the lack of financial performance representations in a FDD is a “trick,” if there are no Item 19 disclosures, it should be readily apparent that unit performance statistics are not provided. If you cannot understand that, then there is something fundamentally wrong.

    You assume, likely correctly, that all zors will provide Item 19 disclosures only if mandated by the FTC – there are many valid reasons as to why it would be problematic for the FTC to make this a requirement.

    Your next assumption is overly broad and not really supported by any facts besides your verbose regurgitations – just because you say something over and over again does not make it true. If this was the case, then: I will win the lottery. I will win the lottery. I will win the lottery. (“Yea, I won!”) This type of positive affirmation only works if you are Stuart Smalley.

    You assume, again, likely correctly, that zors will not do anything unless it is in their best interests. I agree with that assessment since I find that this generally applies accross the spectrum of humanity. Few willingly do things that are not in their best interests, except for perhaps zees that pay fees and deposits to zors without having a clear and precise understanding of exactly what they are getting into.

  5. Bubba!

    Either “earnings claims” are MATERIAL or they are not MATERIAL. The FTC indicates they are MATERIALl but OPTIONAL which demonstrates premeditated federal regulatory policy to protect franchisors from any claims from franchisees that they have mislead by MATERIAL ommissions in the FDD or fraudulenty induced to contract by false representations of success of the franchise.

    Only a small percentage of franchisors make earnings claims and when they do, it is to their advantage to do so. Who are the franchisors who make earnings claims? Are they the smaller startup or less mature franchisors who impose more risk but who will produce more profits for those franchisees who are willing to take the risk? The largest franchisors and the most visible use their visibility and their presale hype to present an appearance of viability to new buyers of their franchises, and elect NOT to make earnings claim.

    The SAFE HARBOR provided by the FDD and the binding adhesory contract with the acknowledgement and integration clauses has worked very well for franchisors who can sell their franchises at any degree of failure/success to new buyers and still remain in compliance with the FDD and the FTC Rule. This SAFE HARBOR has no doubt contributed substantially to the growth of franchising in the economy and to the drowning of franchisees in the waters of the safe harbors of both big and small franchisors, alike.

    Carol

  6. [quote comment=”197607″]

    Bubba Logic?

    Obviously, since the franchisors have 100% protection from claims of fraudulent inducement to contract when they make NO representions of success or profits in their FDD’s, [/quote]
    there are many potential causes of action under state and federal law

    [quote comment=”197607″]
    the new Rule isn’t going to change anything, and even more franchisors will not leave their “safe harbor” because if they can’t and don’t back up their earnings claims with material facts, they will open themselves, as you say, to charges of misrepresentation from those franchisees whose expectations because of the “false” earnings were not realized.[/quote]
    as long as the franchisor discloses accurately, there is no misrepresentation.

    [quote comment=”197607″]
    The Franchisors can now use the Internet to advertise and hype and sell their franchises and as long as the majority of franchisors do not provide “earnings claims” [/quote]
    How is this different than any other type of business selling online?

    [quote comment=”197607″]
    the FDD continues to act as cover to protect them post-sale from charges of fraudulent inducement to contract as well as from non-disclosure of material information to new buyers of franchises.

    The fact that the majority of franchisors don’t disclose “earnings” allows these franchisors to imply that if “earnings” information were MATERIAL, the government would require them to disclose this information, etc…The potential franchisees then act on the pre-sale representations of the franchisor concerning the value and success of the franchise and don’t realize until too late and after they have signed the contract that they haven’t received any information whatsoever in the FDD concerning unit performance of the system.[/quote]

    Carol, you are way too hung up on debating FTC theory and policy. Frankly, nobody really cares about it. The rules are what they are. The franchisees who seek unit performance for validation will clearly see whether it is disclosed.

    [quote comment=”197607″]
    Franchisees will continue to be shocked when they realize that they were “tricked” into signing the franchise agreement with no disclosure as to the actual risk of the investment in terms of material facts concerning unit performance.[/quote]

    Nearly all the UFOCs & FDDs I’ve seen have plenty of disclaimers and disclosures of risk. Franchisees aren’t tricked into signing. Franchisees usually have the resources to invest in a franchise, and have the resources to run numbers thems and hire others to help with business planning.

    [quote comment=”197607″]
    Only, if the FTC MANDATES “earnings claims” will franchisors provide this information to new buyers of franchises.[/quote]
    about 25% provide earning claims now
    [quote comment=”197607″]
    The bottom line is that all franchisees are required to indicate that the franchisor has promised them NO success or profits in the signed franchise agreements [/quote]
    Many things are sold as-is without representations and warranties. This is all market driven. Have you ever read a software license?

    [quote comment=”197607″]
    and the FDD and the signed Contract protect the franchisors against charges of fraud in the courts, as well as “encroachment” and “churning” post-sale in the relationship.[/quote]
    That’s too vague of a statement. If the franchisor provides false information or did not fully disclose what is required, then there are causes of action. Actionable encroachment claims depend on the Franchise Agreement’s defined exclusive territories, if any. Churning

    [quote comment=”197607″]
    The Franchisors will NOT leave their SAFE HARBOR unless forced to do so by government because their attorneys will tell them this is not in their best interests.[/quote]
    I don’t recommend against disclosure to my clients and most franchise attorneys don’t either. It is a business decision for the franchisor.

  7. Thank you, Ryan Knoll, for responding to my Post.

    Obviously, since only a small percentage of franchisors disclose “earnings” the great percentage of franchisors do not feel that this is to their advantage and OPT NOT TO DISCLOSE EARNINGS, as a business decision made with or without their attorney’s advice.

    The great percentage of franchisors therefore don’t leave their “safe harbor” for business reasons. If they make an “earnings claim” and CANNOT back it up with material facts and statistics, they do leave their “safe harbor” if the earnings claim is not carefully designed to avoid claims of misrepresentation, etc… from new buyers. Why, then would franchisors make an earnings claim in Item 19 if they can sell their franchises without making this claim? Most importantly, if they make NO representations about the success/profits of the franchise as the seller in the FDD, they are generally protected from claims of fraudulent inducement to contract in the courts because of the acknowledgement and integration clauses in the boilerplate and adhesory franchise agreements. They are in the safe in the safe harbor of contract law.

    An “earnings claim” that does not show attractive profits to startup franchisees who will spend hundreds of thousands on startup costs is not a good sales tool for the franchisor which, perhaps, is another reason franchisors don’t generally disclose “earnings” or performance statistics on a unit basis to new buyers of their franchises. The franchisor makes his profits on the gross sales of the franchisee whether or not the franchisee is operating the branded business at a profit, breakeven, or a loss. Therein, lies the difference, and another good business reason for the franchisor not to disclose earnings if the earnings will not act as an inducement to new buyers of their franchises.

    The origin of “safe harbor” for me is the statement made to the FTC by Robert L. Purvin, Jr. of the AAFD in Comment #79, to the Secretary of the Federal Trade Commission, over ten years ago, April 27, 1997, as follows: “It is important to recall that mandated disclosure was negotiated by franchisors to provide a safe harbor to avoid being accused of fraud.”

    You indicate that I am too hung up on FTC Regulatory Policy and that “nobody cares” but FRANCHISEES SHOULD CARE because this “safe harbor” leads to rough waters in which franchisees drown because they bought “high-risk” and “unviable” franchises unknowingly because of ineffective regulation, the FTC rule, and the appearance of government oversight of the franchise industry. While, ALL franchisees should hire specialists in franchising to help them VET their purchases, the FTC knows that portential franchisees don’t do this because of scarce resources and weakly says “If possible” “show” your …………………

    Others who advertise and sell their products over the Internet are subject to Truth in Avertising Laws and Consumer Protection Laws. Potential franchisees are not given the same protections as consumers because of the FTC Rule, which actually, in practice, removes the consumer protections from potential franchisees and protects the franchisors from any claims of non-disclosure of material facts to new buyers of their franchises, as well as any claims from franchisees that the success of the franchise was misrepresented to them in the pre-sale process.

  8. Carol,

    Very simple question for you. Does The UPS Store have your/your husband’s financial statements from when you/your husband was a franchisee?

  9. I assume they do because their third-party agent who took over my husband’s UPS Store was furnished these financial statements. Also, they had direct access to the business bank account, with my husband’s permission, of course.

    You know, JD, that I am not going to discuss my husband’s personal business with you and this conversation is about the FTC’s failure to regulate franchising in the interests of franchisees. This conversation is about the failure of the FTC to meet the purpose of the Rule, as stated by the FTC. I consider that the FTC lied to me and to the public who buy franchises. Please don’t try to personalize it and to attack me or my family members personally.

    This conversation applies to ALL franchises and the ability of franchisors under the FTC Rule to sell their franchises at any degree of risk of failure and unprofitability to new buyers of their franchises as long as they comply with the so-called disclosure Rule.

  10. Here’s the reason behind asking this question. If they didn’t get the financials on a timely fashion, how could they have used those in an earnings claim (if they decided to make one)?

    I find it hypocritical to call out the FTC and franchisors about not providing unit performance statistics, when your husband didn’t provide this information to the franchisor until the store was preparing to be sold.

  11. I think it is very disingenuous of you, JD, to suggest that franchisors do not or could not have have detailed proprietory historical information concerning the unit performance in their systems that could be disclosed to new buyers of franchises!

    It is you who are the hypocrit —who insists that he is not opposed to disclosure of unit performance statistics to new buyers but who keeps on insisting that franchisors can’t do this because franchisees won’t cooperate, etc..

    Susan Kezios of the American Franchise Association explores this topic in her public comment to the FTC, Comment #62, Re: 16 CFR Part 436, The Rule, on April 30, 1997, over ten years ago.

    Additionally, Susan Kezios points out in these comments that “If the required pre-sale disclosure of information is important, then it is a fatal flaw of the FTC Rule that disclosure of some measure of financial performance is not required. It is inherently misleading (by omission) not to disclose such financial performance information.”

    If there was the “will” the “way” would be found by the FTC to protect prospective franchisees from investing in high risk unviable franchises that are now sold to unsuspecting franchisees because of the FTC Rule that permits franchisors to sell franchises at any degree of risk and unviability to new buyers with immunity under the law.

  12. You state:
    ‘It is you who are the hypocrit —who insists that he is not opposed to disclosure of unit performance statistics to new buyers but who keeps on insisting that franchisors can’t do this because franchisees won’t cooperate, etc..’

    Um, you stated that they didn’t have your financials until it was time to sell the store. Doesn’t that mean that they wouldn’t have had timely information on your store to include in an analysis?

    I never said I was opposed to full disclosure. The company I worked for had an earnings claim, but you don’t know the half of what goes into it to make sure that the user can rely on the information. Do you think it’s fair when you see salary expense at $20k for the year, because the owner works the store and just takes it as owner’s compensation? That’s not fair to the prospective buyer, because expenses are understated. Same if an owner has 40% salaries when the average is 25%, because they have family on the payroll. That’s not fair to the franchisor.

    As a zor, you have to take a good look at items, that you have no clue about. That’s why the author of the article states reliable franchisee information. When prospective zees are relying on information provided by the zor, they have to be sure that the information is reliable. Thereby, creating more costs to the zee in preparing the statements, and getting the information to the zor on a timely fashion (~60 days if you want to have the most accurate information).

    I suggest asking Susan how that organization is going for her. Seems like she doesn’t have much support from franchisees.

  13. jd — I know that you understand that it is prospective franchisees who need this disclosure of unit financial performance data before they purchase a franchise. I kinow you understand that prospective franchisees, the new buyers of franchises, have NO VOICE and no lobby to protect them and that it is TOO LATE for prospective franchisees once they have purchased an unviable high risk franchise and signed the adhesory long-term contract. The franchise agreement so often uses contract law to legalize a relationship that was not established in good faith and only established with the view of maximizing the franchisor’s profits while reducing the franchisor’s risks and expense of building and operating physical units on which to hang their Brand Name.

    You take cracks at Susan because Susan Kezios, of course, does not have the financial support of prospective franchisees to lobby the Congress for rights for prospective franchisees and neither does the AAFD. The IFA is the wealthy organization who is in bed with the FTC and who lobbies the courts and the Congress to maintain their superior position in the law that permits them to induce franchisees to contract without being required to disclose the material risk of the investment to the new buyers of their franchises.

    Regulators are supposed to be neutral and are supposed to be FAIR to both parties; i.e. the regulated and those for whom the “protective” regulation was promulgate. The FTC Rule creates a situation wherein franchisors CAN hype and sell their franchises to the public at any degree of risk of failure or lack of profits with immunity under the law as long as the franchisor is compliant with the UFOC(FDD). The FTC Rule is not satisfying the purpose of the Rule, as stated by the FTC in the preamble to the Rule.

  14. A smart business owner can often make something work where others have failed. The reverse is also true. Part of the success of a franchise is the responsibility of the business owner. As we have all experienced numbers can be deceiving and information can be presented to benefit the party presenting it. A new franchisee needs to research the location he plans for his business and to understand the market he wishes to target. He needs to learn what he has to do to educate his target market group about the value of what it is he is offering. Even if a franchise has great numbers and does all the right things to support its franchisees, a new franchisee can still fail if the business owner does not use his own research, his own creativity, and his own intelligence and hard work to make it a success. All business ventures present risk. It is the way in which one approaches the risk that determines his personal outcome.

  15. True! Patricia!

    But, when NO financial performance statistics are required to be disclosed to NEW buyers under disclosure law, we see that the franchisors will not leave their safe harbor that protects them from fraud.

    As long as the great majority of franchisors do not disclose unit performance statistics, it will be possible for some franchisors to sell highly flawed and unviable concepts to the public under cover of the FDD.

    Only when the FTC MANDATES financial performance statistics will prospective franchisees be provided the MATERIAL facts necessary to assess the risks and rewards of the investment.

  16. One of the fondest memories I have of learning about the Founding Fathers in school was their belief that the government was not more involved in their lives. It was not that there was taxation without representation, it was that there was not more taxation without representation. The American Revolution was really about getting the crown more involved in the everyday lives of the colonists, such as increased taxation, and when Britain refused saying, “hey, we’re already taxing decks of cards,” the only logical solution was to dump tea and fight. Fight. Fight for the right to have the government make decisions for you. Fight for the government to decide what is best for you. Fight for the government to whip out its teat and nurse you through your troubles. Because in the end, that is what America is all about, the socialist belief that if you refuse to take care of yourself, others should be forced to do so.

  17. More disingenuous rhetoric from Bubba Sparky who likes to use the scare tactics of “socialism” etc… to address the subject of the ineffective FTC Rule governing franchising that is really just a subsidy for the franchisors, promulgated under the guise that it is protection for franchisees in terms of disclosing the “risk” to the purchaser of the franchise.

    Bubba doesn’t dispute that the FDD together with the adhesory long-term franchise agreement with the acknowledgment and integration clauses DOES PROTECT the franchisors from lawsuits for fraudulent inducement to contract or fraudulent concealment of material facts in the inducement to contract, even when the franchisors themselves KNOW at the time of the sale to the new buyer that proprietory unit statistics indicate that their franchise may not be viable for l0% 15%, 20%, 30%, 40% of their startup franchises, as the case may be. If this isn’t withholding MATERIAL information from the buyer, the new startup franchisee, what is this?

    Bubba is smart enough to know that if we didn’t have laws and regulations, we humans would eat each other. The problem in the regulation of the franchise industry is that the franchisors and special interests, the banks and the lenders, the developers, the landlords, and the government itself have CAPTURED THE FEDERAL REGULATOR to the great disadvantage and harm of prospective franchisees who are not provided the KNOWN performance statistics of the units in the franchisor’s network before the sale is finalized.

    Item 20 is a clever artifice and red herring that passes off the obligation of the seller, to disclose performance statistics, to the past and current franchisees who have no legal obligation to disclose anything whatsoever to new buyers of franchisors. If the prospective buyer acts on the representations of the “references” and is damaged, the damages suffered are proximate to the representations made by the franchisee references and NOT to the franchisors.

    In the event of franchisor churning and encroachment, pumping and dumping, it is ONLY the franchisee who loses when the the franchisees’ assets survive under new ownership to continue to produce gross sales for the franchisors. The economy continues to be stimulated in terms of sales and jobs, taxes and other government revenues. Obviously, the FTC Rule was promulgated to favor the franchisor whose network chains favor the economy.

    The FDD facilitates third party “churning” and “encroaching” of startup franchisees and gives the regulators deniability because they advise that they don’t even look at Item 19 and Item 20 unless there is a complaint from a franchisee that there are misrepresentations or omissions in the disclosure document. Even when there are omissions and misrepresentations in the FDD, apparently, the franchisor can only be punished by the State. There is no private right of action for an omission or a misrepresentation in the FDD, is there?

    Obviously, because prospective franchisees have NO voice, NO clout, NO lobby to represent them, they are offered up as sacrifices to the industry and are silenced in failure and generally defeated in the courts because they have, in good faith, signed the long-term adhesory franchise agreements with the acknowlegement and integration clauses, believing that this is the only way to access the profits and success promised outside of the contract. If this is not the intent of the “package” of the FDD and the franchise agreement, this is certainly the effect

    The failure of the FTC to require franchisors to disclose unit performance statistics to new buyers of their franchisors has resulted in the selling of highly unviable and unprofitable franchises to the public with apparent immunity under the law as long as the franchisor is compliant with the FDD. But, perhaps this will change when push comes to shove and the banks and lenders will take a closer look at the unit financial statistics of startup franchisees in the franchisor’s brand chain networks, especially when prospects intend to use their home equity as collateral to back the loan to buy the franchise. See the Franchise Times June-July issue for a discussion concerning the new due diligence banks and lenders will do on BOTH the franchisor and the franchisee in terms of “failure rates” of loans.

    How can this ugly reality be justified as serving the purpose of the rule as stated by the FTC?

  18. Madam Carol – You cannot base your argument on half-truths and semi-facts and expect anyone to take you seriously. Mr. Bubba made an excellent points on freedom to choose and government intervention. Your socialist/paternalistic ideals are foolish and impractical. People buying franchises have freedom of choice and duty to investigate their potential franchise selections prior to buying.

    Ayn Rand

    P.S. Maybe you should read some of my books and learn something? Are you related to Ellsworth Toohey perhaps?

  19. Ayn Rand, Mr. Bubba was my father. Carol, I have never stated that I agree with your statement that FDDs and franchise agreement serve to protect zors from fraudulent inducements to contract and the other stuff you said that I am too lazy to type. Crafty attorneys such as Solomon should easily establish the elements of fraud in any litigation provided such elements do in fact exist and can be proven as readily as you repeatedly suggest. Again, crafty zor attorneys cannot insulate against everything. And I thoroughly disagree with your statement that I am smart enough to know that without laws and regulations we would just eat each other. In point of fact, until you stated that it was actually laws and regulations that prevented me from cannibalizing my neighbor who has yet to return my rubber mallet I let him borrow 4 months ago, I had convinced myself that the only thing that was stopping me from firing up the grill and having a real redneck barbeque was the fact that our local grocery store has recently been out of smoked paprika (which, incidentally, I highly recommend).

    Assuming you believe all you type, why not channel that righteous indignation into supporting your local AAFD chapter, or other zee-friendly organization to lobby for less government weaning and more government nursemaid action? Sure, you may think “What can I, just one Carol, actually do?” But I think you would be selling yourself short. In fact, in the relatively short period of time you have been on BMM and franchisepundit, think of how many people you have annoyed. The force is strong in you young (or is it old?) Carol Skywalker.

  20. Obviously, Bubba is in good form today. I believe the only solution to the problem of INEFFECTIVE DISCLOSURE is for the FTC to stop consulting with Darth Vader and to mandate the disclosure of unit performance statistics to new buyers of franchises.

    This MATERIAL information that is in the possession of the seller of the franchise, the franchisor, should be disclosed to the buyer of the franchise, the franchisee. This is not discretionary money for the targets of the retail franchisors and these investments made by unsophisticated and inexperienced business consumers deserve FULL DISCLOSURE of all material facts in the possession of the franchisor BEFORE the sale and the long-term adhesory contract is signed.

    The “safe harbor” provided by the subsidy of the FTC Rule has resulted in the sale of unviable and flawed franchise concepts to the public with apparent immunity under the law.

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