The Federal Trade Commission and some state laws require franchisors to disclose the initial investment costs to potential franchisees. For example, the rules of the FTC and the New York State Department of Law regarding the contents of a franchise offering prospectus require a franchisor to disclose expenditures relating to:
- Real property, whether purchased or leased
- Equipment, fixtures, other fixed assets, construction, remodeling, leasehold improvements and decorating costs, whether purchased or leased
- Inventory required to begin operation
- Security deposits, utility deposits, business licenses, other prepaid expenses
- Additional funds required to be expended by the franchisee before operations begin and during the initial phase of the franchise
- Other payments that the franchisee must make to begin operations.
These disclosures do not always occur properly and accurately. When this is the case, it can cost the franchisee significant expense and even lead to the failure of the franchise unit.
If you feel that you were misled about the initial investment costs of a franchise, you may be able to take action. The lawyers at the New York law firm of Einbinder & Dunn, LLP, have extensive experience representing franchisees in litigation. Over the years, we have developed a nationwide reputation for effective and efficient legal counsel.
Depending on your situation, we may be able to file a lawsuit premised on the claim that the franchisor did not base its calculations on data relevant to the place where your franchise was located, that the data provided was outdated or that the data provided was intentionally falsified.
In fact, you may have more legal options than you know. However, the best way to ensure your ability to exercise a full range of options is to act quickly. Contact Einbinder & Dunn by filling out our contact form. You can also call 866-490-4909 or 212-391-9500 to speak with our attorneys and experienced support staff.
