What information should a franchise prospectus contain?

There are no fixed rules as to the exact content of a prospectus but, based on guidance from the British Franchise Association, a prospectus should contain information about the following:  ■ The business and financial position of the franchisor. A prospectus should include details on the franchisor’s experience, background and financial position. ■ The people involved in the franchise company. Information should be provided about the qualifications and responsibilities of directors and senior executives. ■ The franchise proposition. This should include a description of the franchise business, including information about what services/training the franchisor will provide to the franchisee, what initial investment is required and what other payments will need to be made to the franchisor. ■ The current franchisees and how many are in the network. ■ Financial projections. The franchisor should give illustrations of what franchisees have achieved in practice to date, or demonstrate what levels of profit can be attained if certain turnover levels are reached. The franchisor must clearly state the basis on which any quoted figures were obtained. The prospectus should inform you that financial projections are not promises of performance and that the success of any franchise will depend on the franchisee’s own individual skill and commitment.