If a franchisor makes sales or earnings projections based on hypothetical examples, the franchisor must ________.

Question

Quizplus · Accepted Answer

If a franchisor makes sales or earnings projections based on hypothetical examples, the franchisor must disclose the assumptions underlying the estimates. This is important so that potential franchisees can evaluate the projections and understand how they were developed. It also helps ensure that the projections are not misleading or deceptive. While displaying a cautionary statement may be a good practice, it is not required in this context. Registering the disclosure document with the FTC prior to its use is required, but not specifically related to sales or earnings projections. Finally, stating that all data is hypothetical does not provide the necessary context for evaluating the projections.

If a Franchisor Makes Sales or Earnings Projections Based on Hypothetical