I'm currently investigating a burger franchise, and there is a lot of information about fees and costs but not much information about expected turnover and financial projections. Is this required to be included in the disclosure document? I want to make sure I have an accurate idea about my financial position, should I go ahead and purchase the franchise.
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Answer by LegalEagle™ Staff, Melbourne 3000 V
- Although the franchise agreement and disclosure document must include details of all required payments to purchase the franchise as well as any regular payments or exit fees it may not necessarily include information about financial projections or the expected turnover from any new franchise business.
- This is because the expected turnover can vary dramatically depending on a broad range of factors including;
o location;
o level of competition; and
o the skill and expertise of the franchisee.
o costs projections;
o cash flow projections; and
o budget planning.