Item 4: Bankruptcy
Content: Shows whether any of the key officers have had any connection with bankruptcy proceedings over the past ten years.
Purpose: As with litigation, this item discloses information to the prospective franchisee about the financial history of the franchise’s leadership team.
Tips & Advice: Obviously a single item of someone who may have been involved in a divorce is not a significant problem. In a large franchise, it is not unusual to discover that someone in management has been involved in some sort of bankruptcy proceedings. On the other hand, if the company chairman or, worse yet, the CFO, has been in bankruptcy proceedings recently, that obviously would not boost your confidence in the franchise.