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

In Wisconsin, franchisees must be provided with certain information before signing a franchise agreement. This includes financial information, such as estimated costs of running the franchise, franchise fees, estimated net profit or loss, verified financial statements from the franchisor, any unresolved litigation against the franchisor, and the estimated amount of capital required to open the franchise. This financial information should be provided in a Franchise Disclosure Document (FDD). The FDD should also detail the franchisor’s business experience, details about the franchise system, any restrictions imposed on franchisees, and the terms and conditions of the franchise agreement. It should also include a business plan that outlines the operations of the franchise, any restrictions on the location of the franchise, and a description of the franchise products and services. The FDD should also include a copy of the Wisconsin Franchise Law, which requires the franchisor to provide a disclosure for prospective buyers. This includes a copy of the franchise agreement, information about the franchisor’s background and experience, a statement about whether the franchisor has been judicially declared insolvent, and details about any bankruptcy proceedings of the franchisor. The FDD should also contain a list of names and addresses of all existing franchisees, a copy of all franchise agreements in effect, and a copy of any restrictive covenants or other agreements that may affect the franchisee. The franchisor must also provide a list of any existing or outstanding lawsuits against the franchisor or the franchise system. Finally, the franchisor must provide a list of any franchises that have terminated or defaulted on their agreement.

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

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