How to Learn About a Franchise's Financial Performance

The information you will be able to discover regarding the financial performance of a specific franchise depends, in part, on whether you are a potential purchaser or simply a curious member of the public.

If you are a potential purchaser, you will be able to find out about a franchise's financial performance through the Federal Trade Commission's (FTC) Franchise and Business Opportunity Rule. Under this rule, franchisors must make a series of detailed disclosures to potential purchasers, either in the form provided by the rule or in the form of a Franchise Disclosure Document (FDD).

The FDD is made up of three basic parts:

The first part contains 23 sections describing the aspects of the franchise program.

The second is a set of the franchisor's audited financial statements.

The third is a copy of every form or contract you will sign should you decide to purchase the contract.