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What information should the franchisee prospectus contain?
For a prospective franchisee, a franchise prospectus is often the first document received in respect of a franchise concept and allows for the evaluation of the business opportunity. For these purposes, the franchise prospectus should be clear, concise and give adequate information about the franchise business. The information a franchise prospectus includes will vary from franchise business to franchise business, but as a minimum it should include information about the franchise business’ track record, including any pilot scheme it has operated; a detailed description of the franchise concept; any initial investment required; and general information regarding training and support. It may be useful for the franchisor to add a section of ‘frequently asked questions’, to answer some of the concerns potential franchisees may have, and a flow chart depicting the steps it takes to become a franchisee, eg, timescales for applications, etc. Many franchise prospectuses include the objectives of the franchisor and an outline five or 10-year plan for the franchisor’s franchise business. Whilst the franchise prospectus should contain all the initial information a potential franchisee will need to know, it is unlikely to answer all of a potential franchisee’s questions about a franchise business.
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