To help ensure that a consumer can adequately assess a franchise opportunity, the FTC’s Franchise Rule requires franchisors to provide clear and accurate information about the franchise.
The FTC reached a settlement with Xponential Fitness over allegations that it deceived potential franchisees. Xponential Fitness sells franchises for various fitness studio brands. The FTC alleged that it deceived potential franchisees by claiming that franchisees typically get their studios up and running within six months of signing the franchise agreement. In truth, the FTC alleges it generally takes more than a year, if the franchise opens at all. It also failed to provide information required by the Franchise Rule.
Owning a franchise is not a guarantee of success. Like any business, a lot of variables come into play, including demand for the product, competition, and the economy.
Be sure the franchisor provides all the disclosures required by the Franchise Rule. Talk to current and former franchisees about their experiences. If you’re not an experienced businessperson, consult an attorney, accountant, or other trusted adviser.