WHAT IS THE FEDERAL TRADE COMMISSION FRANCHISE RULE?
It is a federal regulation which requires franchisors to prepare an extensive disclosure document and to give a copy to any prospective franchise purchaser before he or she buys a franchise. The disclosure document typically used to comply with the Rule is called a Uniform Franchise Offering Circular, or UFOC. Within the UFOC are many different categories of information about the franchise, including points to consider before buying a franchise. Required fees, basic investment, bankruptcy and litigation history of the company, how long the franchise will be in effect, a financial statement of the franchisor, earnings claims (if the company makes them)… all are presented in this disclosure document.
It is a federal regulation which requires franchisors to prepare an extensive disclosure document and to give a copy to any prospective franchise purchaser before he or she buys a franchise. The disclosure document typically used to comply with the Rule is called a Uniform Franchise Offering Circular, or UFOC. Within the UFOC are many different categories of information about the franchise, including some of the information described in the response to Question 9 above. Required fees, basic investment, bankruptcy and litigation history of the company, how long the franchise will be in effect, a financial statement of the franchisor, earnings claims (if the company makes them)… all are presented in this disclosure document. IFA recommends that both your attorney and your accountant review the UFOC and your franchise agreement. For further information from the FTC, or to order a free publication from the FTC entitled Consumer Guide to Buying a Franchise, call (202)326-2222.
