As a franchisor one of your most critical "legal abd business" obligations relates to ensuring that your FDD remains current an up to date. Why? Because if your FDD is not current as to its disclosures and‚ if applicable‚ state based registraion then you will be exposing your franchise system to unnecessary franchisee claims and exposure. Even if you do nothing wrong‚ if your FDD is not current you could be tainting your franchise sales process and exposing your business to frivilous franchisee claims.
So consider the following points:
To learn more about the Time Periods for Updating Your FDD‚ watch this video.
What Types of Changes Matter?
Well consider anything that could be claimed as material to a franchisees investment decision which‚ quite frankly‚ relates to each FDD disclosure item with financial performance representations taking on the most urgency. When determining if a quarterly update is needed‚ some factors or questions to consider‚ include:
There are many factors to consider and as a franchisor you should know and be aware of these events. They will not be difficult to identify. However‚ you must be and remain proactive in ensuring that your FDD is updates. Otherwise…you may be subjecting your franchise system to unnecessary headaches and legal issues.
Date: 08/11/2010 | Category: Start a Franchise
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