So far, it's been kind of fun, hasn't it? This whole ?franchise education? process? You've mentioned to your friends that you're thinking of becoming your own boss, you've discovered a franchise that seems to fit your goals and desires, you've talked to existing franchisees?and now it's time to read the Franchise Disclosure Document (FDD) and Franchise Agreement.



Ugh. It looks and seems heavy and legal. No fun. Scary even. Be convinced that fear at this point is typical and healthy. What you don't realize is that the franchise disclosure document you hold in your hands is a lot friendlier than it seems. It is a standardized document, brimming with franchise information. You've probably heard that it's written to protect the franchisor; you should also know that it protects the franchisee by leveling the playing field. The franchisor is required to share franchise information in a clear, transparent fashion. In turn, all prospective franchisees clearly know their rights and will be expected to meet the same standards.

So put yourself in a positive state of mind and dive in. Give your full attention now instead of making assumptions that may come out to be wrong. You don't want to count on using equipment you already own, or adding your wife's special carrot cake to the menu, only to find out that's not part of the business model. Franchise systems work best when there are clear systems, standards and expectations. The value of your franchise is enhanced and the brand is strengthened when all franchisees offer consistently superior products and services.

The FDD gets over every aspect of the business, including:

1. What is included in your franchise fee and initial investment?

2. Physical property requirements, such as the location, building, equipment and supplies

3. A definition of the operating practices which protect the entire franchise system

4. Initial and on-going training and assistance offered by the franchisor

5. Whether advertising will be local or national and if the cost will be shared

6. How royalties are calculated and paid

7. Bookkeeping, accounting and reporting requirements

8. The parameters of your protected territory

9. More, much more

Give careful attention to the territory. This is one area of the Franchise Agreement that can be negotiable. For additional information on all the sections in the FDD and what to look for in each section, read Chapter 7 of The Educated Franchisee.

Studying the FDD and the Franchise Agreement is an indispensable part of your franchise education! Check each section carefully and make certain you understand how each item will impact you. A sound franchisor will spend whatever time necessary to help you become comfortable with these documents. In the end, you might decide you can't live with the terms. Best to learn that now! And remember - at this stage of the franchise investigation fear is normal. Let it push you to seek the information you need to make the right decision for you.

This article was written by Rick Bisio, franchise consultant and noted author of the Educated Franchisee. Rick has owned both franchised and non-franchised businesses. He has bought, sold and invested in businesses and worked as an advisor to others seeking the same. Visit the http://www.educatedfranchisee to subscribe to Rick's free newsletter.