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We've been covering the 23 sections/items that make up this legal document, the Franchise Disclosure Document (FDD), that you will review before you acquire a franchise. Specifically, we will be talking about section/item six, which is along the lines of expenses. It's really other fees and expenses in the operations of your franchise that you're looking to acquire.
And as we noted in our previous podcast, it's a little bit gray between sections/items five, six and seven in that sometimes these things get mixed and matched a little bit depending on where the franchisor is in their longevity and the type of franchise that it is. So what we've seen is in a lot of cases, for instance, that in section five which deals with the franchise fees and the royalties, some of our franchisors today are literally offering no royalties until you start actually are in business for a year, something like that. So these fees can be give and take. It's just really important that you really evaluate these three sections.
It will definitely depend on the franchise concept that you're looking at. The kinds of expenses that you may see in this area would include if the franchise charges an advertising fee. Some and/or most actually do contribute funds. You as a franchise, contribute funds to a national ad or branding fee fund. Now, some franchises may waive that your first year because they know you're just ramping up.
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