The Complication of Buildouts in FDDs identified 299 franchise brands with multiple buildouts which equates to 819 franchise investment opportunities.
September 14, 2017 // Franchising.com // New York, NY - Franchise Grade®, the leading franchise market research firm in the franchise industry, has studied the impact of franchisor disclosure of additional buildouts in their FDD. This strategy represents an opportunity for a franchisor to offer varying franchise investments under the same brand name. Our study found that 64% of the 299 franchise brands offered 2 buildouts. Only 21 franchise systems offered 5 buildouts.
On average, 90% of franchise systems have separate Item 7s for their buildout options, yet only 13% disclose Item 20 outlets separately. A disclosure that is not clear and concise can be confusing for prospective franchisees and may even be misleading.
Jeff Lefler, CEO of Franchise Grade, commenting on this latest Facts and Figures report stated: “As more franchisors offer multiple franchises under the same brand these options include two or more buildouts. It’s important that franchisors present these buildouts in a clear and concise manner in their FDDs.” Lefler continued: “Franchisors that fail to meet this requirement can confuse prospective franchisees and their advisors, placing them at a competitive disadvantage.”
To download Facts and Figures: https://www.franchisegrade.com/reports/article/complication-buildouts-fdds
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SOURCE Franchise Grade®