The F.T.C. has detailed regulations requiring pre-sale disclosures by franchisors. In addition, approximately one third of the states have laws mandating registration and pre-sale disclosures for a franchise. A franchisor's financial data is used by government regulators, as well as prospective franchisees, service providers, suppliers, and banks. This data helps these users make decisions to approve a franchisor's registration or sales program, buy a franchise, lend money, or provide goods. Entrepreneurs and managers also need this information to create, plan, and control their ventures.
Accountants have a key role in any successful franchise program.
Audit, tax and consulting services are critical to a successful franchise. Accountants who perform these tasks well can help franchisors earn profits, obtain approval for their offering circulars, operate effectively, avoid litigation, and prevail when disputes cannot be avoided. To serve the franchisor the accountant should be familiar with key aspects of the franchise program and governing regulations. The franchisor's lawyer can provide information in these areas. However, the lawyer may be new at representing franchisors or assume the accountant already has this knowledge and thereby not provide all the information the accountant could use to help the franchisor.