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Understanding Required Disclosures
Item 11: Training

By Mario Herman

Franchisor training is one of the most important services a franchisee receives. The training program serves as the foundation for the franchisee operation. Once completed its virtually impossible for a new franchisee to be re-trained. Prospective franchisees need to fully understand this important franchisor activity.

In addition to important disclosures included in the Franchise Disclosure Document, the franchisor is required to disclose its training program as of the franchisorís last fiscal year-end or a more recent date.  The franchisor has to describe its training program in tabular form.

  • In column 1, the franchisor is required to state the subjects taught.
  •  In column 2, the franchisor is required to state the hours of classroom training for each subject.
  •  Column 3 must include a statement of the hours of on-the-job training for each subject.
  •  In a fourth column, the franchisor must disclose the location of the training for each subject. 

The franchisor must also set forth within Item 11 how often training classes are held, and the nature of the location or facility where training is held (for example, company, home, office, franchisor-owned store).  Item 11 must also include a statement of the nature of instructional materials and the instructorís experience relevant to the subject taught, and the franchisorís operations, including the instructorís length of experience in the field and with the franchisor. The franchisor must also disclose any charges franchisees must pay for training, and who must pay travel and living expenses of the training program enrollees.  Item 11 must also state who may, and who must, attend training, as well as whether the franchisee or other persons must complete the program to the franchisorís satisfaction.  If successful completion is required, there must be a statement as to how long after signing the agreement, or before opening the business, the training must be completed. If training is not mandatory, then the franchisor must state the percentage of new franchisees that enrolled in the training program during the preceding 12 months.  Finally, the franchisor must set forth whether additional training programs or refresher courses are required.

The disclosures regarding training are important and should be reviewed carefully.  Many prospective franchisees decide to go into a franchise based on their belief that the franchisor has the experience that the prospective franchisee lacks.  As such, the content and length of training is important information to consider before entering into a franchise agreement.  An experienced franchisee law attorney can assist you in determining how a franchisorí disclosed training program compares to other franchises in the field.

© 2011 FranchiseKnowHow, LLC

Mr. Herman, licensed in Washington, D.C., represents franchisees domestically and internationally in negotiation, mediation, arbitration, and litigation with their franchisors.

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