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Exit Realty - Uniform Franchise Offering Circular/Franchise
Disclosure Document
Description:
What is a UFOC/FDD, Uniform Franchise Offering Circular / Franchise Disclosure Document?
The UFOC/FDD was a response to some unethical behavior in the 1960s and 1970s. Today
franchises are regulated by law. The Federal Trade Commission (FTC) requires that certain
information be disclosed to potential franchisees before a contract can be signed or any payment
made. The information is presented to the prospective franchisee in the form of a document -- the
UFOC/FDD.
Franchise Registration States
The FTC requires franchisors in every state to provide a UFOC/FDD. In addition, some states
require that the offering must first be approved and registered by the state before it can be
promoted to prospective franchise buyers. These states include: California, Hawaii, Illinois, Indiana,
Maryland, Michigan, Minnesota, New York, North Dakota, Oregon, Rhode Island, South Dakota,
Virginia, Washington, and Wisconsin. Certain states, such as Illinois and Minnesota, have even
more stringent requirements for the franchisor. This in turn affords better protection for the
prospective franchisee.
What Does the Franchise UFOC/FDD Contain?
The UFOC/FDD contains 23 items of information that must be current as of the completion of the
franchisors most recent fiscal year. If there is a material change to the information in the
document, the franchisor must make a revision (to be issued quarterly). The disclosure document
must be given to a prospective franchisee at whichever occurs earlier: the first personal meeting of
franchisor and prospective franchisee or ten working days prior to the execution of a contract or
money payment to the franchisor.
Standard Registration Documents:
1. The Franchisor, It’s Predecessors And Affiliates
2. Business Experience
3. Litigation
4. Bankruptcy
5. Initial Franchise Fee
6. Other Fees
7. Initial Investment
8. Restrictio