Should I have a financial performance representation (FPR) in my FDD?

When I get asked this question, I respond as follows: “The FDD has 23 Items. If there were just one Item in the Franchise Disclosure Document (FDD) you could look in deciding whether or not to buy a franchise, which Item would it be? I don’t care what it is, how much it costs, I need to know if it makes money.” FDDs tend to be packed with information and details, and prospective franchisees often…

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California Franchise Exemptions: A Franchisor’s “FastPass” to Selling Franchises

Nobody wants to wait in line…especially when you’ve worked hard and paid a lot of money just to get to the entrance. Disneyland first introduced the FastPass in 1999. This pass lets them skip the long lines for popular rides. It’s a win-win because FastPass frees guests to enjoy their time—and spend more money—elsewhere in the park. In California, the process to register a new franchise offering…

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YES VIRGINIA, THERE REALLY IS A CONFIDENTIALITY CLAUSE!

Confidentiality or non-disclosure agreements (NDA’s) come in different forms and sizes, from stand-alone NDA’s to just a couple of sentences in a long commercial contract. Unfortunately, at times NDA’s are one-sided, overreaching, and create unrealistic obligations. Complicating matters is that vendors (e.g. supplier, service provider, consultant) often present a franchisor with an NDA which…

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How to Find Franchise Disclosure Documents (FDDS) Online for Free

There are four states that publish FDDs online. California https://docqnet.dbo.ca.gov/search/ California’s search engine is slow to update, but every document associated with a franchise registration (FDDs, blacklines, applications, permits) is available on the site, once they get around to updating it. Sometimes you have to know the exact name of the franchisor to be able to find the filing.…

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Selling Franchises in Registration States

I’ve just issued my FDD and want to start selling franchises with it. What are the next steps? This depends on where you’d like to sell franchises. Registration states require you to file your FDD and pay a fee, and most of these states have a formal comment letter process. Before you can start selling in the registration states, you’ll need to receive an acknowledgement or permit from the……

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What is a Trademark Disclaimer?

A disclaimer is a statement that indicates that the applicant does not have the exclusive right to use a specific word of a trademark by itself. Disclaimers are required for composite trademarks (English translation=trademarks with more than one word or design marks with separate elements) for the portion of the trademark that is merely descriptive, generic, or geographic or it contains a company…

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When does my FDD expire?

Your FDD will expire on a national level 120 days after your fiscal year end. So, if your fiscal year end is December 31, your FDD will expire on April 30. When your FDD expires in a certain state will depend on whether that state’s registration is tied to your fiscal year end or if it is tied the effective date of registration. For example, several states’ registrations also expire 120 days…

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Required Financials for Your FDD

1. What financials are required for a franchisor operating in the United States? The Federal Trade Commission requires audited financials for the franchisor for the last three fiscal years before the Franchise Disclosure Document issuance date. This means you need a balance sheet for the last two fiscal year-ends and a statement of operations, stockholders’ equity, and cash flows for the last…

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Trademarks, Goods and State Lines.

I don’t distribute my goods out of state. Can I still trademark my names? The short answer is YES! The Lanham Act (also known as the Trademark Act of 1946) is the federal statute that governs trademarks. Generally, the Lanham Act requires that a mark is used in interstate commerce before it may be registered as a federal trademark. Thankfully, interstate commerce is broadly defined.…

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Clothing Trademarks

Is your trademark a "brand identifier" or just a decoration? Trademarks are used to identify products. A trademark tells you about the product (usually who made the product and a certain level of quality). In order to file a trademark for clothing, you have to use your trademark to identify the clothing as belonging to the trademarked brand and not as a decoration. Trademarks that are only…

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