Featured Coaching Excerpt - Notes & Transcript, Part 1
Receipts: This is a one-page document the prospective franchisee signs to acknowledge that the Franchise Disclosure Document was received.
Item #23: Receipts
Lesson Nugget: To receive information about the franchise, you must first sign the receipt even if you do not want to be a part of the franchise.
Exhibits: 1. A template version of any Legal Contract you may need to sign.
Lesson Nugget: A template is the document that will be used to fill out your licensing agreement.
Exhibits: 2. A full list of all of the franchisees as of the date of the document including their names, addresses, and phone numbers.
Exhibits: The Table of Contents from the Operations Manual
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-Now lightning round item number 23. Now we're going to dedicate this last item in honor of the NBA Hall of Fame basketball player and marketing machine MichaelJordan. So we're going to give the producers a moment to go ahead and pull up some drum roll here--
Can I get the energy flowing? Here we go. Number 23. You're excited.
-I'm excited. They're excited. Let's do it. So here we go. This is a one page document that the perspective franchisee signs to acknowledge that the franchise disclosure document was received. Item number 23, it's the receipt. The receipt? What are we talking about?
-In simple terms is that we need to have the prospective franchisee sign a receipt and date when they received our FDD. And we're required to keep those on record. A lot of times it makes a prospective franchisee a bit nervous. But it's really nothing to be concerned about, other than you're stating that you did receive it, because we're obligated to provide it to you. If you don't sign that receipt and you come to us 15 days later and you want to join, you cannot do that.
-I have a funny story. There's a guy I know who did not buy franchise. But I remember that he had the funniest commentary ever. He was like, I requested information. And they want me to sign this receipt. I'm not signing it. I'm not signing anything until I decide if I want to buy. And I was like, well the thing is, you have to sign it 14 days before you buy. Because you can't buy legally if you don't sign it. He's like, well, I'm not signing it. And it was just so funny how livid he was. But this is something you have to sign this before you buy it.
So if I've been talking you for five months, I still can't buy a franchise for 14 days until I've signed this.
TERRY POWELL: Absolutely. And it's important to make that kind of decision to invest in a franchise. You're going to want to have that information. It's more valuable to that prospective franchisee than anyone else. All right, Terry. We're moving on to exhibits, an area that I know you're excited about, I'm excited about, they're excited about. This is the additional little clarifications that are attached to this FDD. Now they can vary from franchise to franchise a little bit here?
TERRY POWELL: They will.
-And so some of the things we can find in here might be, one, is a template version of any legal contract that you may need to sign. Why could that kind item be included in exhibit?
-Well, the exhibits are really designed to give you insight as to the things that'll happen after you're awarded the license. Or as part of an award of a license, such as the franchise license agreement's going to be templated there. Meaning the blanks will be there. They won't be filled in. So it'll be the template that will be used to actually construct your license agreement with your pertinent information filled in.
-Now this next one here gets me excited because-- it's kind of scary if you're a franchisor and you're selling franchises. But as a general rule, correct me if I'm wrong, I'm going to find a document in there that's going to have the names, the numbers, and the addresses of actual franchise owners. Current franchisees. Is this right?
TERRY POWELL: Yes.
-Is it required to be in there?
-Yes. It's an exhibit of current and they'll go on to give you an exhibit of past franchisees.
-Imagine that you today we're going to go to Target and buy something, and they had to give you a list of all the customers who bought something, who bought that item from Target yesterday. That's the kind of transparency you're getting here, where literally they have to supply you with the names and numbers and contact information for people that have bought a franchise. And I don't know what more clarity and transparency you can ask for. That's great.
TERRY POWELL: It is.
-Now Terry, the next thing is this table of contents. Now the table of contents the way I understand it is it's basically a table of contents for the operations manual for the franchise. And for this, this is kind of like the manual they use to run the business on a day to day basis. Why is the table of contents included in this exhibit? What's the point? Well, it's an important element for the franchisee to understand the depth and breadth of the types of things are addressed in it.
-It's the play book, so to speak. And it helps you really get a good understanding of all the things that are addressed. Because people have concerns that they're going to have to think up or makeup, or create things on their own. In a franchise system, we want you to understand all that's going to be laid out in the best order and the best way for you.
-Now I understand franchisors I've met who said, if we change our operations manual and I change the table of contents, I have to change my FDD, refile a bunch of stuff. It's expensive, rights? So this is like the documented truth. This is the system. This is as real as it gets right here, right?
-And many times a prospective franchisee will say, well let me see the operations manual. But that's proprietary information that we're not going to share with someone who's not under a license agreement. But the best you're going to get is to have a sense of what is addressed in there.
-Now Terry, my brain is about ready to explode just from this fire hose of knowledge. I'm going to go get some duct tape to try to keep my brain from exploding. If it does, it'll just keep it all inside here. But I appreciate you coming in and just giving us this unbelievable knowledge that you just don't get at college, for helping us learn this stuff, and for giving us almost 30 years of FDD knowledge today. So thank you so much.