Uniform Franchise Offering Circular (UFOC)
There is a legal document that any franchisee must be supplied with before the signing of the Franchise Agreement. The Federal Trade Commission (FTC) has made such a regulation in order to provide franchisees with material information about operation of franchise system. UFOC is urged to help franchisees understand and analyze franchisor’s intentions.
The Uniform Franchise Offering Circular must be presented to franchisee 10 days before the signing of the Franchise Agreement.
Every franchise company in every industry should provide its prospective franchisees with that information divided by the following 23 categories:
1. The Franchisor and Any Predecessors
2. Identity and Business Experience of Persons Associated with Franchisor
3. Litigation History
4. Bankruptcy (i.e., any franchisees who may have filed)
5. Listing of the Initial Franchise Fee and Other Initial Payments
6. Other Fees and Expenses
7. Statement of Franchisee’s Initial Investment
8. Obligations of Franchisee to Purchase or Lease from Designated Sources
9. Obligations of Franchisee to Purchase or Lease in Accordance with Specifications or from Authorized Suppliers
10. Financing Arrangements
11. Obligations of the Franchisor; Other Supervision, Assistance or Services
12. Exclusive/Designated Area of Territory
13. Trademarks, Service Marks, Trade Names, Logotypes and Commercial Symbols
14. Patents and Copyrights
15. Obligations of the Franchisee to Participate in the Actual Operation of the Franchise Business
16. Restrictions on Goods and Services Offered by Franchisee
17. Renewal, Termination, Repurchase, Modification and Assignment of the Franchise Agreement and Related Information
18. Arrangements with Public Figures
19. Actual, Average, Projected or Forecasted Franchise Sales, Profits or Earnings
20. Information Regarding Franchises of the Franchisor
21. Financial Statements
22. Contracts
23. Acknowledgment of Receipt by Respective Franchisee