The Franchise UFOC, item by item

The UFOC is by far the most important piece of information that any potential franchisee must consider carefully when considering the purchase of a franchise. Franchising is governed by law, and the FTC (Federal Trade Commission) requires all franchisors to provide a UFOC. -In practice, it is the "program" of the franchisor, and this document should be provided to any affiliate for he / she can make an informed decision. ---

Some key elements included in the UFOC are necessary investment, management personnel and experience of the franchisor, land rights are given to you and your responsibilities as franchisee.-The initial part of the document encourages potential franchisees to read the UFOC in its entirety, and suggests a review with a lawyer or other qualified advisor. -

The franchise agreement in detail the rights of both the franchisor and the franchisee and the franchisor tells how the brand can be used, the time duration of the contract, advertising, payments for the purchase of voting rights, charges renewal and specific terms, and what specific supplies may be purchased from the franchisor. This agreement also underlines the obligation of the legal termination of the contract.

In addition to the legal agreements involved in buying a franchise, keep in mind that the main reason for buying a franchise is that you agree to follow a proven, successful System.-operative said, it is necessary to consider some of the restrictions in actual day to day management of a business franchise. While a certain amount of creativity is welcome, it is necessary to feel comfortable running the business with a series of rules that are primarily defined by the franchisor. -

Let me now touch briefly on each of the 23 standard items contained in the UFOC. -

1. The Franchisor, its predecessors and Affiliates.-The Franchisor describing the company and franchise.-Here, you will discover the name of the franchisor, franchisees, address, type of franchise is offered, and the experience of previous business franchisor, its predecessor, and its affiliates.

2. Business-Experience. The prospective franchisee receives biographical information and professional people who have important responsibilities in the management of activities, such as the franchisor, its officers, directors and directors.-Also included here are brokers and franchise consultants.

3. Litigation.-disclosed here will be a significant litigation and criminal past and civilians participating by the franchisor and its management.

4. Bankruptcy.-If the franchisor or a member of its management has never gone through bankruptcy proceedings in the last 15 years, will be disclosed here.

5. Franchise start-Fee. Here you will find information about introductory rates and other payments, including terms, made to the franchisor to the execution of a franchise agreement.

6. Other Fees.-Item 6 provides details of all recurring fees that the franchisee must make to the franchisor, including:-Actually, the cost of training, advertising, insurance costs, review costs, renewals, leases, and and any other charges for the services provided by the franchisor.

7. Home Investment.-Listed in a table format, includes all expenditure is necessary for the franchisee to do, usually with a high range and low, for which specific equipment, supplies, fixtures, construction, real estate, etc.-also described in This document provides details of payment, such as who is the beneficiary, if it is refundable, and if it is financed.

8. Restrictions on Sources of Products and Services.-Any restrictions or requirements on what the franchisee can buy or rent for the business and where they can be purchased will be specified here.-This includes products, services, insurance, equipment and devices. -

9. Franchisee Obligations.-Here, a reference table indicates where in the franchise agreement, franchisees are able to identify specific requirements that are agreed -. The list tells the obligation franchisee, where he is in the UFOC, franchise and where it is located in agreement.-Sometimes, the individual franchisee obligations may vary.

10. Financing.-If the franchisor provides funding assistance to their affiliates, the terms and conditions of the financing agreements offered directly or indirectly, would be detailed here.

11. Obligations of franchisor - BY invest in a franchise, you receive services from specific franchisor.-Article 11 sets out these services, which may include site selection, training, advertising and market research.

12. Territory.-If the franchisee has been given special rights area, which will be reported in this section.

13. Trademarks.-Here, the franchisor must provide the franchisee with information about the company's trademarks, trade names and service marks are used.-In addition, you will find a list of states and countries where they are registered and any limitations that 'franchisee must comply in their use. -

14. Patents, proprietary Information.-This section provides the franchisee with information regarding the patents and copyrights of the franchisor may have, as well as confidential information, and how it can be used by the franchisee. -

15. Submission to the actual operation of the franchise-Business. Depending on the franchise, the owner may be required to devote full time to the operation of business.-Others allow absentee ownership, or a manager who is trained by the franchisor may operate the business .-The terms and conditions of participation overall are disclosed here.

16. Restrictions on what the franchisee may Sell.-This section describes the restrictions on goods and services that the franchisee can offer its customers.

17. Renewal, Termination, Transfer and Dispute Resolution.-This section discusses in depth the very conditions of agreement.-It reveals length of the contract term, the reasons of the franchisor or the franchisee may rescind the contract, the obligations of both parties after the 'agreement, if either party can transfer the contract to another person, the resolution of disputes, and restrictions on competition, to name a few.

18. Public-Figures. If the franchisor has a sponsorship deal with a celebrity or other public figure, the amount he / she is paid, and if he / she has a role in the effective management of the franchise should be disclosed here.

19. Profit-Claims. Many franchisors make a claim of actual or potential sales, income, profit or for a franchise-location. If they do, it disclosed here.-Obviously, this is a very important section for a potential franchisee.

20. List of Outlets.-The franchisor provides information regarding the number of franchised units and company-owned locations, names, addresses and phone numbers of affiliates, the number of franchises transferred or terminated, not renewed units repurchased by the franchisor, and unit information is not renewed or terminated and causes.

21. Financial Disclosure Statements.-budget of the franchisor (certified) for the last three years is required.

22. Contracts.-Here, the affiliate is given a list of license agreements that he / she is required to sign and attach to the UFOC.

23. Receipt.-The franchisee is required to sign an acknowledgment that he / she has received the UFOC. -

In addition to the UFOC, it is strongly recommended to contact several potential franchisees existing franchisees with a specific list of questions to get answers to, which I will discuss in detail in a future article.

In summary, thanks to a revision of the franchisor UFOC, the franchisee potential is equipped with a huge amount of information that will enable him / her to make a calculation, the decision whether that educated franchise is the best-fit. Most franchise are successful because they have proven experience and usually have immediate cash flow. Assuming that you can follow the rules of the franchise, it is very likely to succeed.

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