{"id":25001,"date":"2017-11-01T12:57:33","date_gmt":"2017-11-01T12:57:33","guid":{"rendered":"https:\/\/www.thefranchiseking.com\/?p=25001"},"modified":"2024-10-17T09:31:24","modified_gmt":"2024-10-17T13:31:24","slug":"what-my-dad-taught-me-about-fdd","status":"publish","type":"post","link":"https:\/\/www.thefranchiseking.com\/what-my-dad-taught-me-about-fdd","title":{"rendered":"The #1 Thing My Dad Taught Me About The FDD"},"content":{"rendered":"

\"FDD\"<\/a><\/p>\n

Although this post is about the #1 thing my dad taught me about the FDD, I need to tell you what prompted me to share his important tip with you.<\/p>\n

In short, every week or so I like to search the web for franchise-related articles and news. That’s because I’m always interested to see what others in franchising are doing. How they’re presenting franchise opportunities<\/a>, what they’re writing about, and finally, what they’re trying to sell.<\/p>\n

Last week, as I was scoping out everything franchise, I ran across a franchise website that focuses on the strangest thing.<\/p>\n

Keep reading to find out what it is.<\/p>\n

FDD’s<\/h2>\n

The website I discovered focuses on FDD’s-Franchise Disclosure Documents<\/a>.<\/p>\n

If you’re new to franchising, the\u00a0FDD<\/strong> is a lengthy (and pretty darn boring<\/em>) document you receive when you show interest in a specific franchise opportunity. It includes oodles of terrific information and data<\/a> on the franchisor. (The FDD also includes your franchise contract<\/em>) So, it’s a very important document. Especially if you get serious about investing in a franchise opportunity you think can be profitable<\/a>.<\/p>\n

But as you’ll see, it’s not the end-all.<\/p>\n

The #1 Thing My Dad Taught Me About The FDD<\/h2>\n

My dad, Jerry Libava<\/a>, was the Director of Franchise Development for Physicians Weight Loss Centers<\/a> from 1984-1990. He helped the company grow, big-time; he helped open\u00a0300<\/strong> franchise units.<\/p>\n

He was also a franchise broker. (One of the early ones<\/em>.) And he had a deep understanding of franchising.<\/p>\n

Part of his job at Physician’s Weight Loss Centers was to go over the FDD with prospective franchisees. (Back then, the document was called the UFOC-Uniform Franchise Offering Circular<\/em>.) He did it hundreds of times. Suffice to say he was an expert when it came to the (250-350 page<\/em>) disclosure document.<\/p>\n

That’s why I believed him when he taught me the following nugget:<\/p>\n

“The FDD Is Not The Business<\/em><\/strong>.”<\/p>\n

Let me show you what he meant.<\/p>\n

A Franchise Business Is…<\/h2>\n

By the time you’re done reading this, the super-important thing my dad taught me about the FDD will<\/em> make sense. Plus, you’ll benefit from it tremendously.<\/p>\n

First off, I need to tell you that the FDD consists of approximately 350 pieces of paper containing very specific words and numbers that are typed in black ink. Pretty\u00a0boring<\/a>, right?<\/p>\n

\"what<\/a><\/p>\n

(I just snapped this picture. It’s part of a real-life, 221 page FDD<\/em>.)<\/p>\n

Look at the words up there.\u00a0Restrictions<\/em>. Compliance<\/em>. Inspections<\/em>\/audits<\/em>. Good stuff. Pretty darn exciting. Not<\/em>.<\/p>\n

My point is this: The FDD is only a snapshot of certain aspects of the franchise business you’re interested in buying. It’s\u00a0not the actual business<\/em>.<\/p>\n

In other words, you’re not buying* a FDD…a document.\u00a0You’re buying a potential living, breathing business<\/em>.<\/p>\n

And because it’s a franchise<\/strong> business, you have the unique ability to learn all<\/em> about (research<\/em>) before<\/em> you buy it.<\/p>\n

Tip:<\/strong> Choosing and researching a franchise is something that’s fairly easy to do, as long as you tackle it one step at a time. Like this<\/a><\/p>\n

Now check this out.<\/p>\n

The FDD Isn’t That Important<\/h2>\n

Some franchise professionals talk about the FDD like it’s the most important part of choosing a franchise to buy. It’s not.<\/p>\n

However-the FDD is<\/em> important; it’s just not the most important thing.<\/p>\n

And speaking of important…<\/p>\n

Don’t Ever Buy A FDD<\/h2>\n

The website I told you I found not only focuses on the FDD, but the people that own the website\u00a0sell<\/em> FDD’s.<\/p>\n

*That’s right: Did you know that you can actually buy<\/em> FDD’s on the internet?<\/p>\n

Who does that?<\/p>\n

\"who<\/a><\/p>\n

(Hopefully not you<\/em>!)<\/p>\n

The reason you should never<\/em> buy a FDD has to do with the process of buying a franchise. The right<\/em> process.<\/p>\n

It’s important for you to know that my process for choosing, researching<\/a> and buying a money-making franchise does<\/em> include reading the FDD. But only after you have a good understanding of the franchise your interested in, including if you feel you’re a good fit for what your role as a franchisee would be, you know all the costs and fees you’d incur, and you can afford it.<\/p>\n

Only then are you ready to dive into the FDD.<\/p>\n

Because doing so before<\/em> you know a lot about the business, before<\/em> you determine if you’re a good fit for it, is a total waste of time.<\/p>\n

But Joel…<\/h2>\n

I know what you’re thinking.<\/p>\n

“The FDD contains earnings claims, and I need to know if I can make money..<\/em>.before I buy it<\/em>”<\/p>\n

Hey, I don’t blame you for wanting to know if you can make enough money to make investing in the franchise worth it. I get it. But, not all franchisors provide earnings* claims.<\/p>\n

*Earnings\u00a0<\/i>claims\u00a0can be in the form of franchisee unit revenues, or even franchisee profits. It depends on the franchisor. But..<\/p>\n

I don’t care if a franchisor reveals earnings claims or not, because th<\/em>ose numbers are just averages anyway.”<\/em><\/p>\n

That’s why I teach my students and clients to talk to and visit<\/strong> existing franchisees in order to get the REAL earnings claims.<\/p>\n

The real numbers.<\/p>\n

The money coming in and the money going out each and every day. And the profit margins of the business.<\/p>\n