To evaluate prospective
franchises, draw on firsthand research, private
organizations, consumer protection agencies,
experts and government regulators.
Unscrupulous franchisors know that no government
or private organization can confirm a company’s
legitimacy or good faith. Dishonest companies
change their names and locations to avoid
traceable histories of complaints.
Your best protection is to check the
franchisor’s track record. Talk in person to
other purchasers. The FTC Franchise Rule
requires franchisors to disclose names,
addresses and telephone numbers of at least the
10 prior purchasers closest to you.
Open the telephone book and look up other
franchisees. Before talking, visit as a
customer. Observe how they operate, their volume
and other operational features.
Commercial sources compile franchise data based
on government disclosure documents. They also
sell analyses of franchises by industry niches
and other particulars.
The Federal Trade Commission provides
information when requested in writing on
available complaints received in Washington and
10 regional offices. Address your request to:
Freedom of Information Act
Request
Federal Trade Commission
Washington, D.C. 20580.
Identify your letter as a
“FOIA Request.” Include your name, address,
daytime phone number and the name and address of
the company on which you want information.
The Better Business Bureau system covers the
United States and a partner system serves much
of Canada. Find a local BBB in your area or
visit the Web site
www.bbb.org.
Contact your state bar association and ask if
they have members who specialize in franchise
law. The American Bar Association publishes a
directory, Forum Committee on Franchising,
that’s organized by state and city. It lists
members’ names, addresses and telephone numbers.
Request a directory from the ABA at 750 North
Lake Shore Dr., Chicago, IL 60611. (312)
988-5522
State franchise law administrators can provide
information about the particular protections
their respective states provide. You can also
get a franchisor’s pre-sale disclosures from
your state department of corporations.
