Navigate the Paper Trail

Obtain Professional Advice

After you receive the FDD, you must take another vital step to make the most of it: Find professional advisors to help analyze it. Unless you're experienced in reading financial statements and analyzing complex commercial contracts, the money it costs for the assistance will be well worth it.

Using the information in the FDD, a good accountant can put together a projection for your planned business and give you an educated guess about whether it will be profitable and how much money it may generate. Without a basic cash-flow needs analysis, you'll have no idea how much capital you'll need to run the business and no clue as to whether it will meet your income needs.

An attorney is invaluable in reviewing the FDD and the franchise agreement. The franchise agreement is usually quite long and complex--after all, it will govern a complicated commercial relationship over a long period of time. An experienced eye looking it over with your interests in mind can identify any essential points of negotiation. Your lawyer can also explain exactly what all that legalese means for you as a franchisee.

Source: The Small Business Encyclopedia, Start Your Own Business, Entrepreneur magazine and Entrepreneur's StartUps magazine.


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