Q.

What’s A Franchise Information Memorandum?

Author: John Pratt

answered by John Pratt

Senior Partner at Hamilton Pratt

A franchise information memorandum is a term used by some involved in franchising to describe a prospectus that’s made available to someone who enquires about taking a franchise.

It doesn’t make sense for franchisors to provide a tailored document for each enquiry, so they prepare a standard document containing all the information they believe a prospective franchisee would be interested to have.

This means a FIM will contain information about the history of the franchisor’s business, individuals involved, number of franchise businesses in existence, what makes the franchise special and will also contain financial information.

It’s the financial information element of a FIM that frequently causes issues for franchisors. Inevitably, franchisors want to paint as positive a financial picture as possible about their business and therein lies the danger.

Whenever financial information about start-up costs, turnover, profit margins and so on are provided, they need to be based on the average performance of franchisees or the franchisor’s performance if, at the time, there are no franchisees.

John Pratt is senior partner at specialist franchise firm Hamilton Pratt and has advised franchisors for over 25 years.

Want to be your own boss? Start today!

  • Relooking

    Relooking is a beauty franchise, offering a variety of skin care and anti-aging treatments... find out more

    £18,000 Minimum Investment
  • Sweets and Treats Vending

    Sweets and Treats Vending is a confectionery distribution franchise company... find out more

    £9,950 Minimum Investment
  • SuperGreen Solutions

    SuperGreen Solutions is an advisor, supplier, and installer of energy-efficient solutions to… find out more

    £178,000 Minimum Investment
  • Wikane

    Wikane is a business development franchise, specialising in working with SMEs to help them… find out more

    £38,000 Minimum Investment

You have pending

More from our business portfolio

  • Global Franchise