It’s frustrating. A Franchise Disclosure Document is extremely important to read. And equally as boring. This document and the Franchise Agreement set out the complete terms under which you become a franchisee. You might have great conversations with the franchise representative. You might get to know, like, and trust him. But what matters is what’s in writing. If you are considering buying a franchise, you will need to get comfortable with this entire, legal-ease filled document. Let’s start with a description: What exactly is the Franchise Disclosure Document? In the United States, franchises are all regulated by the Federal Trade Commission (FTC). One of the regulations requires every franchise to publish a Franchise Disclosure Document (FDD) every year. Every year the document must be updated with current information. The FTC dictates what information must be included in the FDD. The FTC actually writes the table of contents. They ensure that each franchise company provides the same kinds of information, usually called “items.” There are 23 sections in the FDD. Let’s review of some of the most crucial parts. There will be information on the senior managers of the company. That is something you would want to know. Has there been an ownership change? If so, do the new owners have a background in the industry? Have the owners ever filed bankruptcy? This is the kind of information that will be included on the ownership, in items number one, two, and four. Has this company ever had a major law suit? If so, it will be detailed in the FDD. We all know even the most ethical company can be taken to court in The United States these days. So a single lawsuit might not be a reason to worry. But some franchise companies have literally dozens of suits between them and the individual franchisees. If you see that kind of litigation history you know you could be in for big trouble after joining that franchise. That’s a reason to pay attention to item number three – Litigation. You know you have to make an investment in order to start a franchise, but how much? That’s also in the FDD. The company will give you ranges for every start-up cost that franchisees typically experience: rent and advertising and construction. They’ll tell you how much cash you should have on hand in order to cover your costs after you open. Look at items number five, six, and seven for this information. Most people know that a McDonald’s franchisee must purchase all of their food products directly from the franchiser. Does your franchise have a rule like this? You can find out in items 8 and 16. Some franchises give you a protected territory, while others do not. Neither of these is necessarily “better,” but you’ll want to read item 12 to understand how the territory works in the franchise you are considering. Item 19 is the one that is most often talked about. This is the only optional part of the FDD. In this section, the franchisor is permitted to share the financial results that existing franchisees have. This is obviously important information to have. Unfortunately, only about one-third of franchisors provide this. But don’t worry – if yours does not, there is still a way to get this information. The last item we will mention is usually cited as the most valuable. In Item 20 the franchisor must show you how many franchises they have, as well as how many have opened and closed for the past two years. What’s better is that they also have to provide phone numbers for every last franchisee. Why is this so valuable? Because those franchisees are your best source of information on the business. You can pick up the phone and call as many of the existing franchisees as you like. Whatever you want to know about the business, you can ask them. The existing franchisees will give you an inside look into exactly what it’s like to own this franchise. We find they usually give it to you straight – warts and all. And after all, no one is in a better position to tell you what the business is really like than the people who are working in the business every day. So, yes, the FDD is boring reading. There is data and figures and statistics and charts. All the things that might make your eyes glaze over. But look hard at that document. It is the key to learning just how good of an opportunity that franchise really is.
I recently worked on a pro bono project for a friend, and it reminded me of a time early in my career and how lucky I was then to get such great advice from the more seasoned pros around me. Advice that ultimately saved me from some major pitfalls. I made mistakes here and there over the course of nearly 20 years of projects, but with each hiccup came a lesson. Here are some takeaways from my lessons learned and all that sage advice.
Questions Equal Clarity
Clients come to us designers for our expertise, and it is our job to guide them through the process. We are helping them find clarity about their vision and goals for their project. To do that well means asking questions! It is important to remember that not all clients are going to be good at communicating their vision—and that's okay. You can still work with them and get amazing results by asking them lots of questions and following up on those answers with more questions until you're both on the same page. This dialogue will help set clear expectations for project scope, deliverables, and everything in between while avoiding frustration for both parties.
Think about the word 'classic.' Now think of five things that could be described as 'classic'—it probably varies wildly, right? So, which version does your client imagine? You could guess… or you could clarify with more questions like "Can you show me an example of what 'classic' looks like to you?" or "What makes this classic?" And so on. It's a silly example, but it illustrates just how subjective descriptions can be and how necessary it is to have good communication between you and the client. Remember that your clients don't do this for a living, so asking questions will help you get to the root of any issue quickly with less time spent guessing. And no, it won't look unprofessional if you ask a lot of questions, but it will make you a better creative.
Collaboration For The Win
On one side of the table, you have a designer with knowledge and experience. On the other side of the table, you have the client who knows their business, audience, and goals. As creatives, we have to remember that we are on the same team as our clients and aim at collaboration over confrontation. Design should be a collaborative process: both parties are at the table with different perspectives and different knowledge to contribute. It is this diversity of viewpoints that will make the creative stronger and your client ultimately happier.
When you work collaboratively with your clients, they'll often tell you what they need before even realizing it themselves—and sometimes, those needs are things that they didn't even realize they wanted until after having talked it through with someone else! This is because people often have trouble articulating what they need out loud (even if they think they know exactly what they want), so getting clients involved in the process can help ensure that everyone's needs and project goals are met.
It all boils down to communication. Everyone at the table, both clients and designers, want to feel heard and respected. Good communication and listening skills are a way to ensure that clients understand that they don't need to be designers themselves, but they are still contributing meaningfully to the project. This helps keep them fully invested in a great outcome.
Contracts Are Your FriendPhoto by Cytonn Photography on Unsplash
Contracts can help you set clear expectations for both parties. The best way to protect your business and make sure you don’t get burned by a client is to have a signed contract before doing any design work. If you’ve ever been burned by a client (or had to fire one) it’s probably because you didn’t have a contract in place when you started the project with them.
As a designer, it can feel a little awkward to send a contract and you may be tempted to just dive right into the work even when a client hasn't signed a contract. But there are several reasons why you should always, ALWAYS get a contract signed before doing any design work.
First, this will help you protect yourself from scope creep. Clearly defining the project scope is essential. If the client wants to add extra elements or changes their mind four times about what they need to be designed, it's much easier when you have a contract and clearly defined deliverables to say, "Sorry, but we have to go back and renegotiate the scope of our agreement." This way, you won't end up doing more work than you agreed on.
Second, a contract will help your client trust you. When working with someone new, trust is everything—and they need to know that they can rely on what you say and how it will be delivered. A contract helps build that trust by setting expectations around quality and deadlines.
Third, contracts help clarify your client's definition of "done." If there are any questions about what constitutes acceptable deliverables for them (or if their definition changes), it's much easier for all parties involved if those questions are answered in writing before any work begins.
Finally, if something goes wrong and you need legal help, your contract can help prove that you did what was agreed upon in the first place or at least show that there was an agreement in place.
Go With Your GutPhoto by Paolo Bendandi on Unsplash
You were built with intuition; use it! Learn to trust your gut when working with clients. I've found that clients who don't seem like they are being straight with me are often problematic. I don't run into these issues very often these days because time and experience (and a good contract) have made me better at spotting potential issues. When I meet with clients I make mental notes of red flags and green lights. Red flags are the things that a client or potential client might do that give you a moment of pause or make you worry a little. Green lights are, of course, the opposite.
Red flag clients will push boundaries like expanding the scope of work but expecting the cost to stay the same, or delaying payment in an attempt to negotiate a lower price after the work is done despite being happy with the project results. Sometimes it is better to pass on a problematic project; it leaves you open to take on a great one. That's a hard pill to swallow when you are first starting out because you are excited and want to take on as many paying projects as possible. I simply urge you to beware. If something doesn't feel right about a client then it is probably your intuition throwing up a red flag.
Ultimately, it is up to you if you take on the project. Just remember, if you do decide to proceed, get a deposit to start, have a signed contract and make sure it is specific with a detailed deliverables list.
Followthrough Is EverythingPhoto by Josh Hemsley on Unsplash
Last but never least, this one seems like a no-brainer to me but I feel it is essential to call out. Deliver on everything that you say you will do for clients—and do it with a smile! I can't stress how important it is to nurture relationships and build a reputation of being trustworthy, reliable, and awesome to work with. When clients trust you, life just gets easier. They will value your design decisions more easily, they will continue to work with you, and they will recommend you to others that need your services. I promise it is a win-win.
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You’ve made it through the rigorous interview process successfully and the organization has extended you an offer for employment. Congratulations! Now, it’s time to take a better look at what the offer includes.
Here are some tips for understanding the job offer letter:
In most cases, the offer letter should include information about how you will be paid. This may state the frequency of paychecks, whether you will be paid hourly or on a salary basis, and if you will be eligible for commission or bonus payments. In most cases, your compensation will be stated before taxes, so your take-home pay may be very different than what is stated in the offer. If you need help in determining how much you will actually be bringing home in each paycheck, you may want to consult an accountant or ask your HR representative to help you with the calculations.
For commission-based positions, it’s wise to ask about draws and how often commission checks are issued. Some companies only pay commissions one time per month, so it’s important to know this information up front for budgeting purposes.
Details About The Job
A job is much more than just a title, so many companies include information about the daily responsibilities or some type of job description. You should understand the schedule for the job and what will be expected of you. If this information isn’t included, ask the hiring manager for a copy of the job description. This doesn’t mean that it’s written in stone and you will only be required to do those things listed in the description, but it is a good starting point to learn about what you will be doing when you start the position.
If your position is full-time, it’s likely that you will be offered some type of benefits package by the employer. You should pay careful attention to what is offered because these benefits can actually add significant value to the overall compensation package.
Look for information on insurance plans, 401(k) or other retirement savings plans, and other benefits offerings that may be available to you. Employer-based benefits plans can actually add significant value to a position. Some companies offer matching for their retirement savings plans, contributions towards insurance, and tuition reimbursement. If you take advantage of any or all of these options, you may end up with a much more lucrative position than was initially indicated in just the compensation portion of the offer.
Some employers include information about the next steps in their offer letters. For example, if you must undergo a background check or drug test, that information may be included in the offer letter. The letter may also indicate when you can start or how to determine your start date. Now is the time to ask questions if something is unclear or if you need additional information.
Don’t accept the offer if you’re unsure of what the position entails. The recruiter or hiring manager should be able to answer these questions before you start. Good luck finding your next job, and make sure you fully understand the job offer before you accept it!
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This article was originally published at an earlier date.
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