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What information should a franchise prospectus contain?
Unlike the United States and a number of European countries, there is currently no specific legislation in the UK that says a franchisor must provide potential franchisees with a franchise prospectus. Therefore, it is at the franchisor’s discretion whether or not it provides a prospectus to potential franchisees in the UK. However, if a franchisor does decide to provide some form of prospectus, it should ensure it is clear, unambiguous and does not contain any misleading or inaccurate statements about the business.While there are no rules governing what a franchise prospectus should contain, the type of information a potential franchisee should expect to find in it includes details about the franchisor that is sufficient to enable a potential franchisee to understand who they will be working for; an outline of the franchise business - for example, how many franchisees operate in the network and the network’s trading history; and some financial information, such as the cost of initial investment and an indication of potential earnings. However, if the franchisor provides any financial information, it should be made clear to the potential franchisee that such information is provided by way of example only and is not guaranteed.
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