If a Franchisee Has Requested an Earning Claims Statement
As a franchisor, you will be required to provide specific disclosures to potential franchisees. This will include financial information about your business‚ such as a recent balance sheet. However‚ a potential investor may ask for more information than is required.
One of the additional things that a potential investor may ask for is an earning claims statement. An earning claims statement is a document that outlines the history and future predictions of your profits‚ sales and expenses. Again‚ this information is not required in the Franchise Disclosure Document (FDD)‚ but you may want to make it available to prospective franchisees.
By making your earning claims statement available‚ you can give potential investors an idea of their projected returns. If an investor asks for this information‚ and the information is refused‚ they may suspect that there is something about the franchise that you want to hide.
If you have question about earnings claims in your FDD, contact us at (800) 976-4904.
By Charles Internicola December 29, 2010
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