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Franchise Disclosure Agreement Paper
Franchise Disclosure Agreement Essay
The franchisor is expected to give the prospective franchisees a franchise disclosure document (FDD) two weeks prior to signing any contract or receiving any fees. The original intent of an FDD came about as a result of cunning and fast-talking salespersons who would conceal the truth about their businesses, leading to many franchisees investing huge amounts of money into franchises that would ultimately fail. Hence, to protect all the parties involved in a franchise agreement, the FTC formulated the law requiring the provision of an FDD to fully disclose information to the franchise buyers concerning the investment they are considering. Further examination of the purpose, benefits, and drawbacks of an FDD is outlined below by examining the franchise disclosure document of the Broadway Pizza Restaurants.
Broadway Pizza Restaurants consist of railroad-themed enterprises that provide high-quality beverages and food under the name Broadway Pizza Express or Broadway Pizza. The FDD of the corporation covers the amount of money required to join the company’s franchise, which ranges between $479,500 and $934,000, as well as an initial fee $25,000 given to the affiliate or franchisor. The document also summarizes the provisions of the franchising agreement and gives the contact information of the head office of the organization for further questions. In fifty pages, the FDD of Broadway Pizza addresses the terms of the contract that will govern the franchise relationship. It begins by highlighting the franchise law and the risk factors that need to be considered before using franchising as the mode of business entry. The risk factors include the importance of studying state laws prior to pursuing a franchise agreement, dispute resolution using non-binding mediation, amongst others. Other items included in the franchise disclosure document are the franchisor information and affiliates, estimated business investment, business experience, trademarks, franchisor’s assistance, training, advertising, and information systems, financial statements, restrictions for the franchisee, and the like (Broadway Station Restaurants, 2018). In total, the FDD covers 23 crucial items and additional exhibits, which are compulsory in all FDD documents......................GET A PLAGIARISM FREE COPY