“Are these projections reliable?”

DEAR FRANBEST:  I am considering an advertising franchise featuring coupon books, and am confused.  I read in the company’s UFOC [Uniform Franchise Offering Circular disclosure document] under ITEM 19 that the company provides no potential earnings information or representations of potential revenues or profits of any kind.  However, the marketing packet they sent me contains a page entitled “Monthly Revenue Analysis” that shows that I can make from $21,150 to $35,250 revenue per month, with a monthly cost of $9,000 per month.  The salesman verified these numbers in an email.  What do you think?  Confused.

Dear Confused:  What do I think?  I think you should grab your checkbook and run like hell.  The only way a franchisor can legally provide revenue or profit claims or projections of any kind is by using a prescribed formula in ITEM 19 of the UFOC.  This franchisor, and his salesperson, is either knowingly or unknowingly providing illegal earnings claims.  They are either dishonest, ignorant or both.  Run like the wind. 

Sean Kelly, President, IdeaFarm

IdeaFarm is the leading brand development and marketing services firm focused solely on franchised development.  Learn more at http://www.ideafarm.net

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