Ufoc

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Ufoc

  1. 1. THE DISCLOSURE DOCUMENT Uniform Franchise Offering Circular (U.F.O.C.)
  2. 2. The Disclosure Document  The purpose of the UFOC is to provide prospective franchisees with information about the franchisor, the franchise system and agreements that they will need to sign so that they can make an informed decision
  3. 3. KEY ELEMENTS Company Profile Initial Franchise Fee & other fees Initial Investment Franchisee’s Obligations Franchisor’s Obligations Earnings Claim List of Franchise Outlets Available Financing
  4. 4. Company Profile  Provides a description of the company, the franchisor, its predecessors and affiliates  Provides biographical & professional information about the franchisors and its officers, directors and executives
  5. 5. Franchise Fee & Other Fees  Provides info on the initial fee and range & factors that determine the amount of fees  Describesall other recurring fees or payments that must be made
  6. 6. Initial Investment  Presented in table format that includes all expenditures required to establish the franchise  These costs are averages or estimated and may vary in your area
  7. 7. Franchisee’s Obligations  Provides info on what is required from the franchisee such as training schedule, record-keeping, etc.  Itmay include the obligation of the franchisee to participate in the actual operation of the business
  8. 8. Franchisor’s Obligations  Describes the services that the franchisor will provide to the franchisee such as site selection, training, development assistance, grand opening services, etc.  Pay attention to services that the franchisor is obligated to provide and those that they may provide
  9. 9. Earnings Claim  Provides info on estimates of what can be earned from the business  Some report only their highest earning stores’ earnings  Only 20-25% of all franchisors provide this info; best to talk to existing franchisees about earning potential
  10. 10. List of Franchise Outlets  Provides locations and contact information of existing franchisees  Examine how many units the franchisor has taken back and resold  Pay attention to the contact info of those who have left the system
  11. 11. Available Financing  Describes the terms and conditions of any financing arrangements offered by the franchisor
  12. 12. KEY ELEMENTS Litigation & Bankruptcy Territory Proprietary Information Restrictions Renewal, Termination, Transfers & Dispute resolutions Public Figures Financial Statements Contracts Receipt
  13. 13. Litigation & Bankruptcy  Provides relevant current and past criminal and civil litigation for the franchisor and its management  Provides information about the franchisor and any management who have gone through a bankruptcy
  14. 14. Territory  Provides description of any exclusive territory and whether territories will be modified
  15. 15. Proprietary Information  Providesinfo about the franchisor’s trademarks, service marks and tradenames  Provides info about how the patents and copyrights can be used by the franchisee
  16. 16. Restrictions  Includes the restrictions that the franchisor has established regarding the source of products or services  Deals with any restrictions on the goods and services that the franchisee may offer its customers
  17. 17. Renewal, Termination & Transfers  Tells you when and whether your franchise can be renewed or terminated, and what your rights and restrictions are when you have disagreements with your franchisor
  18. 18. Public Figures  Ifthe franchisor uses public figures (celebrities or public persons), the amount the person is paid is revealed in this section
  19. 19. Financial Statements  Audited financial statements for the past three years are included  Focus on the balance sheet and the income statement. Take them to an accountant to evaluate
  20. 20. Contracts  Provides the list of all agreements that the franchisee will be required to sign
  21. 21. Receipt  Prospective franchisees are required to sign a receipt that they received the UFOC

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