 | What is a UFOC? The Uniform Franchise Offering Circular, or UFOC, is a document containing detailed information about a franchise. In 2008, the Franchise Disclosure Document, or FDD, supplants the UFOC. Its contents are regulated by the Federal Trade Commission and are designed to assist the prospective franchisee in analyzing the merits of a potential franchise. By law, a franchisor must provide the franchisee with a UFOC/FDD before a contract can be signed or any payment is made. A UFOC/FDD is made up of three parts: 23 items describing various aspects of the franchise offering, 2) up to three years of the franchisor's audited financial statements, and 3) the franchise agreement that the franchisee must sign if he/she intends to buy the franchise. Keep in mind that neither the FTC nor any of the states has reviewed the offering circular to determine whether the information submitted is true or not. They merely require that the franchisor make representations based upon a prescribed format. If the information provided is false, franchisors are subject to civil penalties. However, it is far less costly to avoid making a mistake in the first place with solid research of your own.
Every UFOC/FDD contains the following 23 items. Note that some of the names of the items have changed for FDDs. These changes are indicated in parenthesis:
Item 1 - The Franchisor, Its Predecessors And Affiliates (The Franchisor, And Any Parents, Predecessors, and Affiliates) Item 2 - Business Experience Item 3 - Litigation Item 4 - Bankruptcy Item 5 - Initial Franchise Fee (Initial Fees) Item 6 - Other Fees Item 7 - Initial Investment (Estimated Intial Investment) Item 8 - Restrictions On Sources Of Products And Services Item 9 - Franchisee's Obligations Item 10 - Financing Item 11 - Franchisor's Obligations (Franchisor's Assistance, Advertising, Computer Systems, And Training) Item 12 - Territory Item 13 - Trademarks Item 14 - Patents, Copyrights and Proprietary Information Item 15 - Obligation To Participate In The Actual Operation Of The Franchise Business Item 16 - Restrictions On What The Franchisee May Sell Item 17 - Renewal, Termination, Transfer And Dispute Resolution Item 18 - Public Figures Item 19 - Earnings Claims (Financial Performance Representations) Item 20 - List Of Outlets (Outlets and Franchisee Information) Item 21 - Financial Statements Item 22 - Contracts Item
23 - Receipt
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