Uniform Franchise Offer Circular (UFOC)

Franchises:

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Understanding The Uniform Franchise Offer Circular

The Uniform Franchise Offer Circular (UFOC) was adopted by the North American Securities Administrators Association (NASAA) in 1993, which was later approved by the Federal Trade Commission (FTC) in 1995. Registration States, which require franchisors to use the UFOC (versus the Franchise Rule) include, California, Illinois, Indiana, Maryland, Minnesota, New York, North Dakota, Rhode Island, South Dakota, Virginia and Washington. Since the Registration States do not accept the Franchise Rule, which is less strict than the UFOC, the usage of the UFOC is more widely used. The Federal Trade Commission requires that a UFOC or FTC disclosure document be used in all non-registration states.

In the Uniform Franchise Offer Circular, there are 23 categories of information that must be provided by the franchisor to the prospective franchisee. This information must be provided to the prospective franchisee at least 10 business days prior to the signing of the franchise agreement. These 23 categories include:

Cover Page
The Franchisor, Its Predecessors and Affiliates
Business Experience
Litigation
Bankruptcy
Initial Franchise Fee
Other Fees
Initial Investment
Restrictions on Sources of Products
Franchisee's Obligations
Financing
Franchisor's Obligations
Territory
Trademarks
Patents, Copyrights, and Proprietary Information
Obligation to Participate in the Actual Operation of the Franchised Business
Restrictions on What the Franchisee May Sell
Renewal, Termination, Transfer, and Dispute Resolution
Public Figures
Earnings Claims
List of Franchise Outlets
Financial Statements
Contracts
Receipt

Note: One important thing to note is that while the UFOC is required by law, no legal body has reviewed its contents to ensure its accuracy, which is why you should retain an experienced franchise lawyer to review everything.

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