With all the effort and expense that goes into complying with the franchise statutes, it really all comes down to a single moment. I have always imagined that moment in slow motion, as the pen of the President of the franchisor lowers … slowly … slowly … slowly to the surface of the paper. The paper is the signature page of the franchise agreement being granted to a new franchise owner. It has been signed by the new franchisee, there are two copies in front of the President. The check for the initial fee is on table. The only thing between “prospective franchisee” status and “owner” status is the President’s signature.
Now in the mid-teens of the 21st Century, that moment is just as likely to be a quick click on a keyboard running a digital document system and electronically attaching a digital signature by the President, but the moment is exactly the same from a compliance point of view.
That moment is the very last opportunity to make sure that all of the steps towards franchise compliance have been taken. I recommend that the President carry a short list in his or her mind that ticks off the basic compliance steps:
Are we registered in the state where this new franchisee is from?
Did we deliver an FDD, and did we get the receipt signed and dated?
Is the signed/dated receipt in the file? Does the receipt show a signature date that is at least 14 days clear (let’s call it 16 days) before today?
Are the other papers we require in the file? This might include a formal Franchisee Statement about documents delivered and the absence of performance promises made, etc.
If the President can impose this small discipline, I can’t tell you the number of problems that the franchisor can avoid.
The discipline is a simple rule for the President: the President’s pen does not touch the paper…the keyboard for the digital signature program does not get clicked … until the President is assured that these basic steps have been taken.