Theoretically, a franchisor could receive a name and contact for a particular franchise buyer without disclosing this in the Franchise Offering Circular, however any savvy franchise attorney will surely tell you that this is a gray area and should doubt, disclose! If the person providing the information talks to the franchisee buyer about almost anything, the franchisee could be preparing for further litigation down the road if anyone finds out about this and there is some kind of dispute in the future between the franchisor and the franchisor. new franchisee. , and if the regulators find out, especially in states like CA, you’ll regret not disclosing the facts in the disclosure documents to the franchisee buyer at the time of the sale.
In franchises, finder fees can both require and trigger disclosure, so know that of course it depends on how those deals are made. A name and phone number is different than the search engine telling them how great the franchise is and then recommending them, that’s really problematic legally, it could get you or the franchisor in trouble in the future, just be aware of that.
You may need to talk to a franchise attorney, several states also disapprove of this type of thing depending on the state and the rules and regulations, I know the FTC probably isn’t too keen on the concept. Franchising is a tough business, it’s like the rules and regulations force you to run your business with your hands tied behind your back, too much red tape, they have really ruined the industry in some ways. Just think how many more jobs we would have today if it were easier to franchise decent concepts and proven business models. I guess between 5 and 10 million more jobs.
I think that’s why I liked the fact that a former franchisor had run for president, those points need to be made and everyone should read; Grinding it Out, by Ray Kroc, among others such as the history of Dominos, Wendy’s, or “Start Small and Finish Big” by the founder of Subway.
One thing is for sure, the disclosure requirements on franchises have gotten ludicrous, and the Federal Trade Commission has allowed runaway over-regulation in this place, then throw in some of the onerous regulations in states of registration and what we’ve got now it’s a really unbelievable amount of red tape holding our economy back, simply because franchising is a huge growth engine for small businesses and that means a lot of jobs.