May 6, 2015 - Franchise Articles by |

Do you suspect that your franchisor misrepresented important details about its product, or the company itself? Misrepresentations to franchisees violate the Franchise Disclosure Rule. To get a clearer idea of how this has violated your rights, consult a franchise attorney.

Pre-sale disclosures to prospective franchisees require that truthful and factual information be provided to the franchisee prior to signing the franchise agreement. All vital information about the company and the franchise should be disclosed to prospective franchisees prior to making any agreement. This will provide them with all the facts necessary to understand all the conditions and help with the decision-making process on whether or not to sign the agreement.

However, there are times when a franchisor will make false statements about the franchise and the company in order to convince the prospective franchisee to sign the agreement.

Franchise Disclosure Rule

Briefly, the Franchise Disclosure Rule requires the franchisor to present the prospective franchisee with a document that contains in-depth information about the company. This document, known as the Franchise Disclosure Document (FDD), enumerates twenty-three specific items that the franchisor must answer truthfully, with facts to back-up the information.

The FDD must be furnished to the prospective franchisee at least fourteen days prior to signing the franchise agreement. After such agreement has been signed, and the franchisee discovers that fraud has been committed by the franchisor by withholding vital information, this misrepresentation of information, if proven true, will give the franchisee the right to file a case against the franchisor.

Consulting a Franchise Lawyer

In order to comprehend the full extent of this violation, you should consult a franchise attorney. Your attorney can explain to you in full detail what specific items were violated in the FDD, and what you can do about it.

An experienced attorney specializing in franchise laws will be able to determine the type of case that can be filed against the franchisor and the appropriate penalties that correspond to the specific violations committed. These penalties could include freezing the assets of the franchisor and prohibiting it from operating as a franchise company.

In other words, your franchise attorney will defend your rights as a franchisee and will work out the details, within legal boundaries, on how you can be compensated for the fraudulent act committed against you.

Consult with Jeff Goldstein and his team at Goldstein Law Firm if you suspect that your franchisor was not upfront about a few critical details regarding its franchise company, which may have resulted in your loss of income, among other things.

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