2. The franchisor has significant control over the operation of the franchisee or is empowered to significantly control the operation of the franchisee or to provide significant assistance to the operation of the franchisee; and carefully review the information contained in these documents before consulting your CPA and your lawyer. Just because these documents appear to comply with FTC rules and/or the state`s various reporting requirements does not mean that they do so or that the conditions are in your favour. Most of these regulations only require the franchisor to fully and fully disclose different categories of information required by law in the document. As long as disclosure is made in the right manner, the franchisor can elaborate the terms and conditions of its franchise and its commitments as a franchisee in almost any desire. Identification form, for example. B a brand name or logo that are legally associated with the franchise. Trademarks are protected by law and are distinguished by the symbol ™. Many of the elements contained in a UFOC are common to many types of partnership agreements. The document will contain general information on the current nature and status of the franchisor, including economic stability.
Details of all royalties, royalties, upfront investments and other conditions applicable to the franchisee are also taken into account. The corresponding financial statements, which are to be used as documentation for business information, are often found in a UFOC. Document containing instructions to advise a franchisee on how the franchise should be executed. Never expect the purchase of a franchise to give you an exclusive and protected area. Many UFOCs explain that you don`t get exclusive territory, but that the “franchisor policy” is not to implement other franchises within 3 miles. However, “policies” can change. The UFOC can also say that if the franchisor decides to open another site near you, you have the right to refuse to buy the new location first. Another common provision allows you exclusivity in a domain only if your sales are maintained at a certain predetermined level.
While some franchisors will provide you with forecasts of the revenue and expenses of a new franchise site, most will not. This area is heavily regulated by the FTC to prevent franchisors from making unfounded claims. Now, however, more franchisors are starting to provide forecasts. This change in philosophy is due to regulatory changes in the late 1980s, which provided guidance givers with guidelines for the presentation of revenue information. A franchise publication document (FDD) is a legal document submitted to potential franchise buyers as part of the pre-sale procedure in the United States. It was originally known as the Uniforme Franchise Offering Circular (UFOC) before the Federal Trade Commission conducted revisions in July 2007.