Does the FDD include a pro forma financial statement for Fitstop franchisees?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
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 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.
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, the Federal Trade Commission, and the appropriate state regulatory agencies.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 49)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, the Item 19 regarding Financial Performance Representations states that Fitstop does not make any representations about a franchisee's future financial performance or the past financial performance of company-owned or franchised outlets. The FDD also states that Fitstop does not authorize its employees or representatives to make any such representations either orally or in writing.
This means that Fitstop does not provide a pro forma financial statement, which is a projection of future financial performance, within its Franchise Disclosure Document. A pro forma financial statement would typically include projected revenues, expenses, and profits, helping potential franchisees assess the financial viability of the franchise.
However, if a prospective franchisee is purchasing an existing Fitstop outlet, the franchisor may provide the actual records of that outlet. It is important for potential franchisees to be wary of any financial performance information or projections received from other sources, and to report such information to Fitstop's management, the Federal Trade Commission, and the appropriate state regulatory agencies.