My Eyelab - 2017 Full Franchise Disclosure Document
What is a UFOC/FDD, Uniform Franchise Offering Circular / Franchise Disclosure Document?
The UFOC/FDD was a response to some unethical behavior in the 1960s and 1970s. Today franchises are regulated by law. The Federal Trade Commission (FTC) requires that certain information be disclosed to potential franchisees before a contract can be signed or any payment made. The information is presented to the prospective franchisee in the form of a document -- the UFOC/FDD.
Franchise Registration States
The FTC requires franchisors in every state to provide a UFOC/FDD. In addition, some states require that the offering must first be approved and registered by the state before it can be promoted to prospective franchise buyers. These states include: California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Oregon, Rhode Island, South Dakota, Virginia, Washington, and Wisconsin. Certain states, such as Illinois and Minnesota, have even more stringent requirements for the franchisor. This in turn affords better protection for the prospective franchisee.
What Does the Franchise UFOC/FDD Contain?
The UFOC/FDD contains 23 items of information that must be current as of the completion of the franchisors most recent fiscal year. If there is a material change to the information in the document, the franchisor must make a revision (to be issued quarterly). The disclosure document must be given to a prospective franchisee at whichever occurs earlier: the first personal meeting of franchisor and prospective franchisee or ten working days prior to the execution of a contract or money payment to the franchisor.
Standard Registration Documents:
1. The Franchisor, It’s Predecessors And Affiliates
2. Business Experience
5. Initial Franchise Fee
6. Other Fees
7. Initial Investment
8. Restrictions On Sources Of Products And Services
9. Franchisee’s Obligations
11. Franchisor’s Obligations
14. Patents, Copyrights and Proprietary Information
15. Obligation To Participate In The Actual Operation Of The Franchise Business
16. Restrictions On What The Franchisee May Sell
17. Renewal, Termination, Transfer And Dispute Resolution
18. Public Figures
19. Earnings Claims
20. List Of Outlets
21. Financial Statements
How Do I Use this Franchise Document?
The UFOC/FDD is similar to a securities prospectus. It can provide the information you need to evaluate a company or to target potential sales clients. An accredited franchise company, whether publicly traded or privately owned, must provide this disclosure document.
The UFOC/FDD is most valuable for potential franchisees, potential franchisors, franchisors, investors, financial companies and suppliers to franchisees.
What UFOC/FDDs Do Research and Markets Have?
The number of franchise company UFOC/FDD’s filed yearly is probably around 3000. Many of these companies are start-up or young concepts with only a handful of franchised units. Our library of current and archived UFOC/FDDs contains documents from both older, more established companies and noteworthy, new, and exciting opportunities.
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