Franchise Financial History

The disclosure document provides you with important information about the company's financial status, including audited financial statements. Be aware that investing in a financially unstable franchisor is a significant risk; the company may go out of business or into bankruptcy after you have invested your money.

Hire a lawyer or an accountant to review the franchisor's financial statements. Do not attempt to extract this important information from the disclosure document unless you have considerable background in these matters. Your lawyer or accountant can help you understand the following.

• Does the franchisor have steady growth?
• Does the franchisor have a growth plan?
• Does the franchisor make most of its income from the sale of franchises or from continuing royalties?
• Does the franchisor devote sufficient funds to support its franchise system?