One of the reasons it’s a big deal is that the federal government requires franchisors to update their FDD every year and make it available to prospective franchisees. Another reason is because it’s a well of invaluable information about a franchise company. Actually, I should say: Some FDDs are a well of information, some more than others, specifically around Item 19: Financial Performance Representation.
According to the International Franchise Association, only 30 percent of franchisors provide Financial Performance Representations, and some only supply information for their company-owned stores.
I decided to ask Heidi Ackerman, Great Clips Director of Franchise Administration, about this – specifically how Great Clips handles Item 19. Here’s what she said:
We spend a lot of time preparing our FDD. We are very proud of the information we are willing to share with prospective franchisees. We actually like to boast about the quantity and the quality of the information we include in both Item 19 and Item 20 (Outlets and Franchise Information).
It takes a lot of work to put that information together. It’s not easy to do, and the fact that we don’t have any corporate-owned locations makes getting these numbers very time consuming. But we do it because we think it’s important for anyone who’s considering our company to have this information.
If you’re a prospective franchisee and you’re reading a FDD that doesn’t include this information, I think you should ask why.
Good point, Heidi. Have you been reading up on FDDs this summer? Tell me what you’re finding under Item 19. Leave a comment below!