(Solution Download) If the law required franchisors to provide estimates of potentia

If the law required franchisors to provide estimates of potential earnings, would there be more or less growth in the number of franchises? Explain your answer.

Entrepreneurs who are thinking about investing in a franchise almost invariably ask, ?How much will I make?? Surprisingly, the law does not require franchisors to provide any estimate of, or actual data on, the earnings potential of a franchise. Franchisors can voluntarily choose to provide earnings data on their uniform disclosure documents but are not required to do so. If franchisors do make earnings claims, as mentioned in the text, they must indicate whether these figures are actual or hypothetical, follow specific rules, and have a reasonable basis for these claims. About 75 percent of franchisors choose not to provide information about earnings potential.


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