What is the FTC's Franchise Rule regarding financial performance representations for Baya Bar?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
[Item 19: FINANCIAL PERFORMANCE REPRESENTATIONS]
ITEM 19 FINANCIAL PERFORMANCE REPRESENTATIONS
The FTC's Franchise Rule permits a franchisor to provide information about the actual or potential financial performance of its franchised and/or franchisor-owned outlets, if there is a reasonable basis for the information, and if the information is included in the Franchise Disclosure Document. Financial performance information that differs from that included in Item 19 may be given only if: (1) a franchisor
provides the actual records of an existing outlet you are considering buying; or (2) a franchisor supplements the information provided in this Item 19, for example, by providing information about possible performance at a particular location or under particular circumstances.
Other than the preceding financial performance representation, we do not make any representations about a franchisee's future financial performance or the past financial performance of company-owned or franchised outlets. We also do not authorize our employees or representatives to make any such representations either orally or in writing. If you are purchasing an existing outlet, however, we may provide you with the actual records of that outlet. If you receive any other financial performance information or projections of your future income, you should report it to the franchisor's management by contacting William Loesch at 2343 Hylan Boulevard, Staten Island, New York, 10306, and (718) 989-2890, the Federal Trade Commission, and the appropriate state regulatory agencies.
Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 52–53)
What This Means (2024 FDD)
According to Baya Bar's 2024 Franchise Disclosure Document, the FTC's Franchise Rule allows franchisors to provide information about the actual or potential financial performance of their franchised or company-owned outlets, provided there is a reasonable basis for the information and it is included in the Franchise Disclosure Document. This means Baya Bar is permitted to share data on how existing locations are performing financially to give potential franchisees an idea of what they might expect.
However, Baya Bar states that financial performance information differing from what is included in Item 19 of the FDD can only be given if the franchisor provides the actual records of an existing outlet being considered for purchase or supplements the information in Item 19 with details about possible performance at a specific location or under particular circumstances. This ensures that any additional financial information is properly contextualized and substantiated.
Baya Bar clarifies that, other than the financial performance representation included in Item 19 (if any), they do not make any representations about a franchisee's future financial performance or the past financial performance of company-owned or franchised outlets. Furthermore, Baya Bar does not authorize employees or representatives to make such representations, either orally or in writing. If a prospective franchisee receives any other financial performance information or projections, they are instructed to report it to William Loesch at Baya Bar's headquarters, as well as to the Federal Trade Commission and the appropriate state regulatory agencies. This is to protect potential franchisees from unauthorized or unsubstantiated claims.