Any franchisor considering marketing new franchises in 2021 by leaning on pre-pandemic financial results and omitting 2020 declines should know the perils of this plan, says Rochelle Spandorf at Davis Wright.
Why Make an FPR?
According to a recent study, franchisors that make a Financial Performance Representation (FPR) sell more franchises than those that choose not to.
1 The study found that brands that are transparent about some aspect of their system s financial performance are overall better performing systems and attract more candidates.
Franchisors that opt not to make an FPR are hamstrung in trying to answer a candidate s most pressing question how much money can I make? This explains why two-thirds of all franchisors today make an FPR compared to just 20 percent in 1995.
Beware of Making an FPR Based Solely on Pre-COVID-19 Data