Registration and renewal season is here for many franchisors,
and state comment letters offer a glimpse of the hot-button
issues in franchise disclosure. Among trending disclosure topics
are disclaimers protecting franchisors, Item 19 financial
performance representations, and discretionary fees and
services.
Given the volumes of disclosure that franchisors must make,
disclosure documents often contain disclaimers that protect
franchisors. For example, Item 7, estimating a franchisee's
initial investment in a franchise, might include a disclaimer that
the franchisor is not guaranteeing that the estimated costs will be
a franchisee's actual costs. However, state regulators
have begun pushing back on such Item 7 disclaimers. State
regulators have also taken issue with disclaimers in Item 11
(assistance by franchisors), which state that a franchisor who
approves a site or a lease is not representing that
the site or lease is suitable for conducting the
