What is a FOC?
FOC stands for “Franchise Offering Circular.” Some states have franchise investment laws that require franchisors to provide a pre-sale disclosure document (FOC) to potential franchisees. These states treat the sale of a franchise like the sale of a security. They typically prohibit the offer or sale of a franchise within their state until a company’s FOC has been filed of public record with, and registered by, a designated state agency. An FOC will generally include: 1. A description of the franchisor and the type of license it is offering; 2. The business experience of the franchise company’s owners and/or managers; 3. Initial fees, continuing fees and royalties, if required; 4. Initial investment estimates; 5. The licensee’s obligations; 6. The licensor’s obligations; 7. Policies about the geographic territory protected by the license agreement; 8. Restrictions on what the licensee may sell and how it may be sold; 9. Renewal and termination policies; 10. Transfer of ownership polici
