Franchising: communicating your offer without misleading promises

When you turn an existing business into a franchise network, your very first advertisement aimed at prospective franchisees creates specific expectations. A statement about earnings, investment or support can carry as much weight as a detailed presentation. Before promoting the opportunity, you therefore need a method for distinguishing between demonstrable results, assumptions and commitments the franchisor is genuinely ready to make.

1. Build a record of verifiable claims

The starting point is not a slogan, but what you can substantiate. Gather the claims you would like to use on your website, in brochures, at trade fairs and in meetings: the investment required, opening timescales, results from company-owned operations, the support provided and the features of the business model.

For each claim, prepare an internal record containing:

• the exact wording to be used;
• the document or operational experience that supports it;
• the period and context it relates to;
• any conditions that limit its applicability;
• the person responsible for approval and the review date.

One outlet’s results are not automatically a forecast for a franchisee. A business run by its founder may benefit from local recognition, established relationships or property arrangements that are difficult to replicate. These differences should be explained when presenting the results, not buried in the footnotes.

If you do not have enough evidence to support a promise, replace it with a concrete description of your approach. Explaining how the work is organised is more useful than claiming that success is easy to achieve.

2. Present investment requirements and results without shortcuts

The phrase ‘investment from’ requires particular care. Prospective franchisees need to understand what the figure includes and which expenses are excluded. At a minimum, distinguish the initial fee payable to the franchisor from the costs of premises, fit-out, equipment, stock and working capital needed at launch, where relevant.

Also specify whether VAT is included and the main variables that could affect the total outlay. Do not present the initial franchise fee alone as though it were the total capital needed to open.

For financial results, distinguish between three categories:

• Historical data: actual recorded figures, specifying the period, scope and characteristics of the business concerned.
• Projections: calculations based on explicit assumptions, not results already achieved.
• Targets: business objectives that do not constitute guarantees of financial returns.

Avoid phrases such as ‘guaranteed payback’ or ‘guaranteed earnings’ where the outcome depends on local demand, costs and business skills. Even a sound projection can become misleading if the headline promises certainty that the text below then qualifies.

For example, rather than saying ‘open immediately’, explain which steps must be completed and who is responsible for them. Precision makes the offer more credible without turning it into a promise beyond your control.

3. Apply Italian rules to your communications too

In Italy, franchising is governed by Law No. 129 of 6 May 2004. Article 6 requires franchisors to act loyally, fairly and in good faith in their dealings with prospective franchisees, and regulates the provision of information necessary or useful for entering into the agreement. A carefully drafted contract is therefore not enough if negotiations involve contradictory messages.

Article 4 requires a complete copy of the contract, together with the required annexes, to be provided at least thirty days before signing. Advertising does not replace this obligation, but it must be consistent with the information the prospective franchisee will formally receive.

Article 8 also provides that, if one party has supplied false information, the other may seek annulment of the contract under Article 1439 of the Italian Civil Code, as well as damages where payable. This does not mean that every inaccuracy automatically leads to annulment, but the risk warrants attention in advance.

Legislative Decree No. 145 of 2 August 2007, concerning misleading and comparative advertising, is also relevant to promotions aimed at prospective business owners. Have a lawyer review particularly sensitive financial claims, considering their overall effect rather than simply the accuracy of individual words.

4. Give everyone the same version of the offer

Prepare an approved presentation, an up-to-date financial information sheet and a frequently asked questions document. Any external consultants engaged to promote the franchise opportunity should use these materials too.

Establish who can authorise changes, discounts or additional commitments. After each significant meeting, send a written summary of the clarifications provided and correct any misunderstandings promptly. Keep copies of the different versions of the materials distributed so that you can establish which offer was presented to each prospective franchisee.

When costs or services change, update the website, brochures and presentations together: an overlooked page can continue to create false expectations.

In practice: before publishing your offer, test every promise against three questions: can we substantiate it, have we explained its limitations, and are we equipped to deliver it? This provides a practical foundation for building trust across the franchise network.