The Uniform Franchise Offering Circular is the legal document that you will get when you are pursuing opportunities in the world of franchise ownership.
Usually a couple of hundred pages long, it is an exciting read, featuring gobs and gobs of data.
On the first page, the US Government states that you are required to receive this document from the franchise companies registered here, but that the US Government has not checked their validity.
You need to check it, and you do not have to do it alone.
One of the many things that I do for my candidates is to insist that they protect themselves.
I assist them by referring them to competent attorneys in NEO, that are familiar with these legal documents.
These are attorneys that I trust, and use myself
US federal law, and state law in 14 states, require that a franchise
prospect receive a current copy of the 75 – 100 page document known as
the Uniform Franchise Offering Circular (UFOC) at the first meeting
with a representative of the franchise company. A current copy of the
UFOC must be in the possession of the prospect for 14 calendar days
before the prospect may sign any commitment or make any deposits.
Finally, the franchise contract, with all blanks filled in, must be in
the possession of the prospect for five business days before he may
sign it. Similar documentation and procedures are required under
Below, you will find the definition of a
franchise, according to the US Federal Trade Commission as well as the
table of contents for a UFOC. There are a full twenty-three points in
total, consolidated here into thirteen.
A franchise is "An
agreement for consideration by which a person permits the distribution
of goods or services under his trademark, service mark, or trade name,
during the term of which the grantor retains control over others or
renders significant assistance to others."
Franchisor, predecessors, affiliates and the officers and their business experience
Litigation and bankruptcy
estimated initial investment and all fees, including the initial
franchise fee, ongoing royalties, advertising fees, site fees, transfer
Restrictions on the sale of products and services and also on their sources
Franchisor’s obligations and the franchisee’s obligations
Available financing and territory rights
Obligations to participate in the operation of the business
Renewal, termination, transfer and dispute resolution
Earnings and/or sales claims
List of outlets and franchisees, including all who left in the last year, and three years of opened or closed units
Audited financial statements of the franchisor
Franchise agreement, leases and other documents
Receipt of the Circular to be signed by the prospect
As you can plainly see, things can get rather complicated when investing in a franchise of your own, so use experts…Experts in franchise law should not cost you any more. It will cost you more to use a family friend that is an attorney, that is not used to working through a UFOC!
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