There are many concerns of a weight loss franchise that need to be addressed by the prospective franchisee. Many individuals contact me looking to invest in a weight loss franchise believing that the product works, so the franchise should be successful. Unfortunately, just because a weight loss product works for you does not mean it will be a good franchise investment for you.
I started in franchising as an in-house attorney for Nutri/System, Inc., when Nutri/System had existed for over 20 years and had 1800 corporate and franchised locations in the U.S. After a bankruptcy in 1993 and sales to a few different owners, today Nutrisystem (name changed) has evolved into a purely Internet based weight loss program. This program, which is not currently a franchised system, is based on real food, reduced calories, exercise and behavioral modification (similar to Jenny Craig and Weight Watchers).
However, many weight loss franchises are not based on such solid methods. Many prospective weight loss industry franchisees who contact me are looking at systems that are based on a new drug or diet craze which are not FDA approved, lack any empirical research of their effectiveness and are questionable at best. To bank your hard-earned money and significant time on a franchise that is based on unproven methodologies is risky, and perhaps foolish.
My advice is to research any franchise opportunity carefully. Speak to franchisees that are in the system and franchisees that have left the system; review the audited financial statements of the franchisor; read the 23 items of the FDD (they are required to be written in “plain English”); and retain an experienced franchise attorney to review the documents and provide an unbiased evaluation of the opportunity. Caution when investing in any franchise system is prudent, but particularly when investing in a “fad” diet franchise system.
This article is not intended to provide legal advice and does not create an attorney/client relationship. Many factors contribute to providing legal advice, including the specific facts of a situation.
This is a guest post by Nancy Lanard. Nancy’s law firm is a "legal boutique" that custom-tailors legal solutions to meet the specialized demands of small to medium-sized companies, individuals seeking a franchise and businesses looking to expand into franchising. Her vast experience in the areas of business and franchise law has included representing businesses in the negotiating and drafting of various types of contracts, handling the purchase and sale of businesses, reviewing, negotiating and advising prospective commercial tenants on the leases for their business, evaluating franchise documents for prospective franchisees and developing and registering franchise documents, including Franchise Disclosure Documents and franchise agreements, for businesses expanding into franchising.
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