According to the law, franchisors must provide potential investors with a basic disclosure document and are required to guarantee a profit to the franchisee in the third year of the franchise operation.

Question

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According to the law, franchisors must provide potential investors with a basic disclosure document, but they are not required to guarantee a profit to the franchisee in the third year of the franchise operation. In fact, franchisors are prohibited from making any earnings claims or guarantees of financial success.

According to the Law, Franchisors Must Provide Potential Investors with a Basic