A franchisor that makes sales or earnings projections based on hypothetical examples need not disclose the assumptions underlying the estimates.

Question

Quizplus · Accepted Answer

A franchisor is required to disclose all material facts about a franchise opportunity, including any sales or earnings projections. If projections are provided, they must be supported by reasonable basis and disclosed in writing, along with the assumptions and qualifications upon which they are based. Failure to provide such details would be considered a violation of the FTC Franchise Rule.

A Franchisor That Makes Sales or Earnings Projections Based on Hypothetical