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.

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