I n fa c t, v e r y  ofte n, it  is t he  " ment a li t y  a nd a tt it ude " of pr ospe c ti ve   fr a n c hise e s that
is ver y  much a  
major  c ontribut or to thi s a tt it ude  b y  f ra nc hisors.
P rospe c ti ve  fr a nc hisee s wa nt ea rnin g s p roje c ti on s, e a rnin g s c laims , a nd a n y  fina n c ial
infor mation re latin g  to pr ovidi ng  them with a " be tt e r und e rsta ndin g  o f w ha t the f inanc ial
potential is
for  them in t his par ti c ular  busi ne ss. "
I nd e e d, f rom m y  v a nta g e  point  in t he  dire c t m a rke ti ng  a nd sa les o f f r a nc his e  c onsul ti ng , I   c a n
state  c a te g o ric a ll y  that pr ospe c ti ve  fr a nc hise e s will  c onti nua ll y  ba d ge r, c a jol e  a nd other wise  
c a use  r e pre s e ntatives of  t h
e  fr a n c hisor to g ive the m all fina nc ial pr ojec ti on s or e a rnin g s pot e nti a l
c laims  that the y   fe e l wil l " he lp t he m eithe r c onst ru c t a pr ofor m a  or pr oje c t a  c a sh
-
flow   for  the
busi ne ss."
F ra n c hisors a r e  ofte n re l uc tant to provide  thi s infor mation si mpl y  b e c a use
the " hist oric a l r e c o rd"  
of tha t par ti c ular   c ompan y   with re sp e c t t o it s e x ist ing  store s, or its  ne wne ss  a s a  fr a nc hisor, or  
other  de mo g ra phi c  or g e og r a phic va ria ti ons m a y   sugg e st t ha t i t would be unwise  to provide  
infor mation t o the pr ospe c ti ve  fr a n c hisee  
that mi ght m isl e a d that indi vidual .
W he n thi s re a soni ng  is e x plaine d to fr a nc hisee s, t he y   will  invar iabl y  dis c o unt t ha t not ice  a nd
sugg e st t ha t t he y  und e rst a nd that these  a re  just  pr ojec ti ons ra ther  than a c tu a ls. The y  will  fur ther  
insi st t ha t t he y  kno w tha
t  ther e  a re  no g ua ra nte e s, a nd the y  will  ult im a tel y  s ugg e st t ha t t he y  will  
onl y  use  thi s infor mation  a s a   "g uide "  for  b a c k g ro und pr e pa r a ti on fo r the  m ore   " objec ti ve "  
c a lcula ti ons t ha t t he y  wil l be a ble to make  late r on  in t he  proc e ss.
Ye t, we  a lso kn ow th a
t, once   g iven this  t y p e  of inf orma ti on, pr ospe c ti ve  f ra nc hisee s will  
invar iabl y   wa nt t o " hold the f ra n c hisor a bsol utel y   a c c ountabl e "  if th e  fr a nc hisee  doe s not  mee t
those or ig inall y  su gg e ste d e a rnin g s c laims  or pr oj e c ti ons onc e  he  is op e n f or bu siness.
The
fr a n c hisor knows thi s, so i f he  doe s g ive a n y   e a rnin g s c laims , the y  ma y   tend to a c tuall y  be  
more  c onse rv a ti ve  than t he y  shoul d b e  a nd thus  n ot sup porte d b y  som e   a c t ua l hi storica l fig u re s
that r e fle c t hi g he r sa les a nd pr ofits. I n thi s c ons e r va ti ve  a pproa c h
, the a tt it ude  of the  fr a nc hisor is  
supporte d b y  his f e a r of   potential li ti g a ti on.
S o on the one  ha nd, if the  e a rnin g s c laims  or po te nti a l projec ti ons a re  too h ig h or u nr e a li sti c a ll y  
hig h, the f ra nc hise e  will  a bsol utel y  hold t he  f ra nc hisor a c c ountabl e  a nd
pu rsue  li ti g a ti on if that
fr a nc hise e  doe s not  me e t t hose  sa me le ve ls of sa l e s or pr ofits i n his own store .
On the  other  ha nd, if out of f e a r of  suc h li ti ga ti on the f ra n c hisor pr ovides e a rning s c l a im s or
proje c ti ons ve r y  low or   c onse rva ti ve  in orde r to pr ot
e c t t he  e ve ntualit y  of a   fr a nc hise e  not havin g  
a  stellar  loca ti on, the pr o spe c ti ve  fr a nc hise e  ma y   ve r y  ofte n d e c ide tha t t hi s pa rtic ular  busi ne ss
doe s not  off e r e nou g h pr ofit pot e nti a l and the re fo re  he  will  pa ss.
C onse que ntl y , c a u g ht i n that t y pe  o f dile mm
a , one   c a n unde rst a nd wh y  fr a n c hisors, i n man y  
c a se s, a re  r e lucta nt t o pro vide the se  t y p e s of pr oj e c ti ons or e a rnin g s c laims  a t all.
5
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I n fa c t, v e r y  ofte n, it  is t he  " ment a li t y  a nd a tt it ude " of pr ospe
major  c ontribut or to thi s a tt it ude  b y  f ra nc hisors.
P rospe c ti ve  fr a nc hisee s wa nt ea rnin g s p roje c ti on s, e a rnin g s c
infor mation re latin g  to pr ovidi ng  them with a " be tt e r und e rsta
potential is
for  them in t his par ti c ular  busi ne ss. "
I nd e e d, f rom m y  v a nta g e  point  in t he  dire c t m a rke ti ng  a nd sa
state  c a te g o ric a ll y  that pr ospe c ti ve  fr a nc hise e s will  c onti nua
c a use  r e pre s e ntatives of  t h
e  fr a n c hisor to g ive the m all fina nc
c laims  that the y   fe e l wil l " he lp t he m eithe r c onst ru c t a pr ofor
busi ne ss."
F ra n c hisors a r e  ofte n re l uc tant to provide  thi s infor mation si
of tha t par ti c ular   c ompan y   with re sp e c t t o it s e x ist ing  store s, or its
other  de mo g ra phi c  or g e og r a phic va ria ti ons m a y   sugg e st t ha
infor mation t o the pr ospe c ti ve  fr a n c hisee  
that mi ght m isl e a d that indi
W he n thi s re a soni ng  is e x plaine d to fr a nc hisee s, t he y   will  invar
sugg e st t ha t t he y  und e rst a nd that these  a re  just  pr ojec ti ons ra
insi st t ha t t he y  kno w tha
t  ther e  a re  no g ua ra nte e s, a nd the y  will
onl y  use  thi s infor mation  a s a   "g uide "  for  b a c k g ro und pr e pa r
c a lcula ti ons t ha t t he y  wil l be a ble to make  late r on  in t he  proc
Ye t, we  a lso kn ow th a
t, once   g iven this  t y p e  of inf orma ti on, pr
invar iabl y   wa nt t o " hold the f ra n c hisor a bsol utel y   a c c ountabl
those or ig inall y  su gg e ste d e a rnin g s c laims  or pr oj e c ti ons onc
The
fr a n c hisor knows thi s, so i f he  doe s g ive a n y   e a rnin g s c laims
more  c onse rv a ti ve  than t he y  shoul d b e  a nd thus  n ot sup porte
that r e fle c t hi g he r sa les a nd pr ofits. I n thi s c ons e r va ti ve  a pproa
supporte d b y  his f e a r of   potential li ti g a ti on.
S o on the one  ha nd, if the  e a rnin g s c laims  or po te nti a l projec
hig h, the f ra nc hise e  will  a bsol utel y  hold t he  f ra nc hisor a c c ountabl
fr a nc hise e  doe s not  me e t t hose  sa me le ve ls of sa l e s or pr ofits i
On the  other  ha nd, if out of f e a r of  suc h li ti ga ti on the f ra n c hisor pr
proje c ti ons ve r y  low or   c onse rva ti ve  in orde r to pr ot
e c t t he  e
a  stellar  loca ti on, the pr o spe c ti ve  fr a nc hise e  ma y   ve r y  ofte n d
doe s not  off e r e nou g h pr ofit pot e nti a l and the re fo re  he  will  pa
C onse que ntl y , c a u g ht i n that t y pe  o f dile mm
a , one   c a n unde
c a se s, a re  r e lucta nt t o pro vide the se  t y p e s of pr oj e c ti ons or e
5
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