Disclosure Document Audits

A common claim or counter claim brought by franchisees center around a franchisor’s alleged disclosure law violations or failure to perform certain obligations pursuant to its franchise agreement.

The purpose of the Disclosure Document Audit is to review the franchisor’s disclosure documents and perform an internal audit to determine whether a franchisor is susceptible to exposure from certain claims by a franchisee. The Disclosure Audit is designed to provide information to a franchise company to enable it to assess its potential exposure and make strategic decisions to mitigate its ongoing exposure.

The Disclosure Document Audit includes:

• An audit of the franchisor’s Item 7 initial investment.
• An audit of the franchisor’s Item 19 financial performance representation (if applicable).
• An audit of the franchisor’s fulfillment of its pre-opening obligations under its franchise agreement.
• An audit of the franchisor’s fulfillment of its continuing obligations to the franchisee under its franchise agreement.
• Implementation of checklists and documentation programs.

Stark & Stark’s Proactive Franchise Solutions include:

• 360° Franchise Sales Compliance
• Proactive Operational Compliance
• Franchisee Validation Audits
• Proactive Communications
• Disaster Preparedness

The predicate of each Proactive Franchise Solution is to assist a franchisor in shrinking its bucket of legal issues and problems, resulting in reduced legal costs, increased System compliance and improved franchisee relations.

For questions, or additional information on how Stark & Stark can help you & your franchise system, please contact Adam J. Siegelheim, Chair of Stark & Stark’s Franchise group at 609.791.7003 or via email, asiegelheim@stark-stark.com.