What type of financial information must be disclosed to potential franchisees?

In Washington, franchise law requires franchisors to disclose certain financial information prior to the sale of a franchise or any other agreement related to a franchise. This financial information is intended to protect potential franchisees from any unanticipated financial obligations or losses. The information must include the franchisor’s audited financial statements, which include the balance sheet and income statement, among other documents. The franchisors must also provide their most recent tax returns and any information regarding any pending litigation or bankruptcy proceedings. Furthermore, potential franchisees must receive an itemization of all fees and payments related to the franchise purchase agreement. This includes any fees for the sale of the franchise, royalties, advertising, or other costs associated with the franchise. Finally, franchisors must disclose any financial benefits, arrangements, or relationships between them and the franchisee, such as an ownership interest, option agreements, or loan repayments. This information must be presented in a meaningful and comprehensible manner so that potential franchisees are able to make an informed decision.

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What type of financial information must be disclosed to potential franchisees?

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