Uniform franchise
Uniform franchise
What is a UFOC?
The UFOC was an outcome to some franchise dishonorable travail in the 1960’s and 1970’s. Now franchises are controlled by law. The Federal Trade Commission (FTC) demands that specific information be exposed to prospective franchisees before an arrangement can be signed or any defrayment established. The information is introduced to the potential franchisee in the form of a Uniform franchise document — the UFOC.
The FTC demands franchisors in every state to offer a UFOC. Besides, some states demand that the offering must initially be sanctioned and registered by the state before it can be advertised to potential franchise purchasers. These states comprise: 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 rigorous demands for the franchisor. This successively allows more effective protection for the potential franchisee.
What Does the UFOC comprise?
The UFOC comprises 23 items of Uniform franchise information that must be current as of the completion of the franchisor’s 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 revelation of document must be afforded to a potential franchisee at whichever falls out before: the initial personal meeting of franchisor and potential franchisee or ten working days before the carrying out of an arrangement or money defrayment to the franchisor. Analysis of basic UFOC Items:
1. The franchisor and any predecessor. This part comprises historical background material about the franchisor, in addition to any predecessors. It comprises corporate and trade names, address and main place of business. An analysis of the franchises should comprise information such as the nature of the franchise and business experience of the franchisor, comprising direct experience in a franchise.
2. Identity and business Uniform franchise experience of persons related to the franchisor. All names of individuals having considerable duties in the procedure of the business or in backing services offered to the franchisees must be exposed. Information reflecting the person’s present position in the company and business experience for the last five years is likewise comprised. If a commercializing representative or franchise broker is engaged, the same information is demanded.
3. Litigation history. Elaborated Uniform franchise information about criminal, civil and administrative judicial issues engaging any of the officers, proprietors, managers or main executives of the company is exposed in this section if the allegations or proceedings would concern the potential franchisee.
4. Bankrupcy history. The franchisor must expose whether the company or any of its managers or officers has Uniform franchise filed for bankrupcy during the past 15 years. Information about each pursuit must be comprised.
