What is a UFOC?
The UFOC was a response to unethical behavior in the years 1960 and 1970. Franchising is now regulated by law. The Federal Trade Commission (FTC) requires that certain information to potential franchisees before a contract can be signed, be disclosed or made any payments. Information is, potential franchisees in the form of a document submitted to - the UFOC.
The FTC urges franchisors in every state a UFOC. Moreover,Some states require that the offer must first be approved and funded by the state before they registered on the franchise prospects. The following states: California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Oregon, Rhode Iceland, South Dakota, Virginia, Washington and Wisconsin. Some states, like Illinois and Minnesota, have even stricter requirements for the franchisor. This provides better protection forpotential franchisees.
What is UFOC?
The UFOC contains 23 items of information that must be updated for the completion of the franchisors most recent fiscal year. If there is a substantial change in the information contained in this document, the franchisor (do not publish a revision to quarterly). The disclosure document must be a franchisee under the condition that occurs first: a personal encounter, first franchisor and franchisee or are given tenWorking days prior to the execution of a contract or pay to the franchisor.
Standard UFOC Item:
1. The franchisor, its predecessors and affiliates
2. Business Experience
3. Litigation
4. Failure
5. Franchise Fee Trial
6. Other expenses
7. Initial investment
8. Restrictions on sources of products and services
9. Franchisee obligations
10. Financing
11. FranchisorBonds
12. Country
13. Brands
14. Patents, Copyrights and Proprietary Information
15. Obligation to participate in the actual operation of the franchise business
16. The restrictions, which sell to franchisees in May
17. Renewal, termination, transfer and dispute resolution
18. Public Figures
19. Earnings Claims
20. Point List
21. Financial Statements
22. Contracts
23.Reception
How to use the franchise document?
The UFOC is similar to the list of titles. E 'can provide the information to evaluate a company or to target potential sales clients. An accredited franchise company, whether publicly traded or privately, these disclosure document.
The UFOC is most valuable for potential franchisees, potential franchisors, franchisors, investors, financial companies and suppliers to franchisees.
Product Overview Standard UFOC:
1. The franchisor and one of his predecessors. This section contains documents of historical reference for the franchisor, and all his predecessors. It contains the names of companies and business address and principal place of business. A description of the franchise should include information such as the nature of the franchise and the professional experience of the franchisor, including direct experience in the franchise.
2. The identity and the experience ofPeople connected to the franchisor. Must have all names of persons who are important tasks in the management of support activities and services to franchisees made available to be disclosed. Information to identify the current position of the individual in society and business world in the last five years is also included. If a representative of the marketing or franchise broker is affected, the same information is required.
3. Litigation history. Detailed information relating to criminal lawCivil and administrative litigation involving any of the officers, owners, directors or key executives of the company is shown in this section, if the claims or practices that the potential franchisee.
4. Failure in history. The franchisor is unclear whether the company or its directors or officers have declared bankruptcy in the last 15 years. Must be included for each action.
5. Initial franchise franchise rights and / or other firstPayment. This article offers franchise fees and sign other initial payments to the detriment of the dealers to the franchise agreement. Section open to payment terms and fees, the use of these funds, and if payments and taxes will be refunded in whole or in part.
6. Other expenses. All other costs are detailed, including royalties, advertising costs, expenses, costs of insurance, training, audit and accounting, consulting, change of tenancy agreements, costand other costs associated with franchising.
7. The estimated initial investment franchise. The estimate of the cost of establishing a franchise connection is that a series wih upper and lower case, as should the real estate, construction, equipment, supplies, permits, furniture, signage, capital, inventory work, etc. This section the name of the person or persons to whom the payment to the previous one, made on what terms and whether the conditions for repayment.
8.Obligations of the franchisee to purchase or lease from designated sources. Buy All requirements to the franchisee of goods, services, supplies, equipment and insurance for the opening and / or management of a franchise franchisor designated source must be disclosed. Franchisor must keep an open question whether they receive income from approved suppliers, following the acquisition of subsidiaries.
9. Obligations of the franchisee to purchase or lease is in accordanceSpecifications or authorized distributor. Development of supply sourcing, this section describes each seponsibility franchisee to purchase or lease is pre-approved suppliers or specified by the franchisor. Specific requests are generally not included in the price, but the prices are rebates from suppliers and the procedures used by franchisors quoted in general.
10. The form of financing. All programs offered by bothFranchisor or its assets are described in this section.
11. Obligations of the franchisor: another control, assistance or services. This section describes the services and initial and ongoing support from the franchisor. Often it is in two parts - the obligations of the franchisor and shared services that are provided by the franchisor. Some types of services and support described in the training, promotional materials, site selection, market research and computerServices.
12. Rights. If the franchisor grants an exclusive right to land and rights described in this section. All conditions to be met by the franchisee to obtain these rights and the right of the franchisor are also provided.
13. Trademarks, service marks, trade names, logos and commercial species sumbols. The franchisor must disclose information relating to registration of trade marks, service marks, trade names, logo types and commercial matterssumbols with the U.S. Patent and Trademark Office. Also included is a list of states and countries where the registered trademarks, and subject to the restrictions on the franchisee for the use of these trademarks.
14. Patents and copyrights. These lists, disclosure of patents and copyrights that may be involved in the operation of the franchised business and trade secrets and confidential information.
15. Obligation for the franchisee to participate in the operation ofBusiness or goodwill. If the franchisor to the franchisee involvement in the functioning of society requires to be mentioned. Are terms and conditions for participation established.
16. Restrictions on goods and services from related companies provided. Any limitations or exclusions for goods and services that may be commerialized by the franchisee in this section.
17. Renewal, termination, withdrawal, amendment or transfer of the franchise agreement andInformation. In addition, the section is to offer longer and more complex the requirements of the franchisor and franchisee options, if a franchise is due for renewal terminated, redeemed, exchanged or agents.
18. Agreement with public figures. If the grantor has no compensation or a program approval with a public figure, must be clarified. If the person in public life in the ownership or management is involved from the franchise, it must also be disclosed.
19. EffectiveAverage, projected or franchise provides sales, profits and gains. There is an option. Some franchisors say they do not have the media, real or projected revenue and earnings potential franchisees. If the franchisor does not apply to sales, profits and income, then the franchisor must be clearly described, is made by what method the indication.
20. About franchise franchisor. The franchisor provides a summary of franchisingsold, the number of operations, the number of agreements signed, but not running, and the number of units of the company. Information on the number of franchises terminated or not renewed on the grounds for termination or non-renewal of the last three years is also required.
21. Budget Committee. In this section, there is a complete set of financial statemetns, usually a record of the past fiscal year profit and loss account and changes in financial positionFranchisor for the last three years. Most states require financial statements.
22. Franchise Agreement and related documents. Will be a copy of the grant and other documents signed by the franchisee must be included as exhibits.
23. Recognition of a subsidiary. Potential franchise holders are required to obtain confirmation that the disclosure document was signed by the franchisees receive donors.
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