You've just discovered a great franchising opportunity and decided to buy into a franchise. Before going through the process, and signing that franchise agreement, it's important to understand what you're getting yourself into. Misunderstandings can lead to an unsuccessful business venture and the feeling of being taken advantage of or deceived. In this blog, we'll go over what you can expect when presented, or seeking, a franchising opportunity.

Before offering or selling a franchise in Alaska, franchisors will need to properly prepare and issue prospective franchisees a Franchise Disclosure Document (FDD). There are no franchise specific laws in Alaska, it is not a franchise registration state, and does not require state specific registrations or filings. However, an FFD must still be provided by the franchisor and this document must contain mandated items required under the Federal Franchise Rule. The Federal Franchise Rule can be found here. The FDD must contain information about the franchising offer with regard to:

1. The Franchisor and Any Parents, Predecessors, and Affiliates
2. Business Experience
3. Litigation
4. Bankruptcy
5. Initial Fees
6. Other Fees
7. Estimated Initial Investment
8. Restrictions on Sources of Products and Services
9. Franchisee's Obligations
10. Financing
11. Franchisor's Assistance, Advertising, Computer Systems, and Training
12. Territory
13. Trademarks
14. Patents, Copyrights, and Proprietary Information
15. Obligation to Participate in the Actual Operation of the Franchisee Business
16. Restrictions on What the Franchisee May Sell
17. Renewal, Termination, Transfer, and Dispute Resolution
18. Public Figures
19. Financial Performance Representations
20. Outlets and Franchisee Information
21. Financial Statements
22. Contracts
23. Receipts

Because the costs for violating franchise laws can be substantial, it is important for franchisors to comply with these laws. Franchisors in Alaska only need to comply with the requirements of the FTC Rule and these items must be included in the FDD. Having the FDD reviewed by an experienced contract attorney can give you the peace of mind you need before entering a franchise agreement. They will be able to determine if the FDD is reasonable and even-handed, while making sure the terms are as transparent as possible.