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Any franchisor considering marketing new franchises in 2021 by leaning on pre-pandemic financial results and omitting 2020 declines should know the perils of this plan, says Rochelle Spandorf at Davis Wright.
Why Make an FPR? According to a recent study, franchisors that make a Financial Performance Representation (FPR) sell more franchises than those that choose not to. 1 The study found that brands that are transparent about some aspect of their system's financial performance are overall better performing systems and attract more candidates. Franchisors that opt not to make an FPR are hamstrung in trying to answer a candidate's most pressing question—how much money can I make? This explains why two-thirds of all franchisors today make an FPR compared to just 20 percent in 1995. Beware of Maki...