We're continuing on from previous posts plowing through the Franchise Disclosure Document, also known as the FDD. As we mentioned previously there are 23 sections in this FDD. We are going to be reviewing one of the sections, Section 3/Item 3, which is truly what I consider to be very important, which is knowing the good standing of the franchisor that you're about to get married with and any litigation history of that franchise.
So what are some of the things that people might get concerned about if they found things in Section 3/Item 3 that stood out and that maybe are a red flag?
Let's start with the good stuff and why this is such an important section. This is a key reason why we are so passionate about franchises because a franchise must give you this FDD. How wonderful is it to have information that can help you make an informed decision? Whereas when you're buying an existing business or starting a business from scratch you’re just not going to get this kind of information.
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