When it comes to franchising, sometime a “consultant” is not a consultant. The common definition of a “consultant” is a person who gives professional advice or services, typically as an independent contractor. In franchising, the label “consultant” has now been adopted by those who are franchise sales brokers, and people can be misled by the title, “consultant.”

How Are Consultants Used in the Sales Process?

Every franchise consultant knows that sales of franchises are regulated by the Federal Trade Commission, and by about 15 states. The regulations are technical. Folks who sell franchises know they must comply with the rules. Among the regulations, franchisors and those who sell their franchises may not tell prospects “how much can they make.” Instead, a franchisor has the right to express in writing as part of their franchise disclosure document what are called under the FTC rule “franchise performance representations (FPRs). FPRs help franchisors inform prospects about their economic performance of franchised units that are operating, or affiliated nonfranchised units that are operating. The purpose of the FPR is to provide a guide of what might be expected if someone buys the franchise. It is not a guarantee of performance.

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