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
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
- 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
© 2011 FranchiseKnowHow, LLC
Mr. Herman, licensed in Washington, D.C., represents franchisees
domestically and internationally in negotiation, mediation, arbitration, and
litigation with their franchisors.