What is the Franchise Ufocs Role
What is the Franchise Ufocs Role
The FTC set out the first franchise rules requiring minimum disclosure in 1979, originally known as an offering circular. Since that time the format and content have continued to evolve, providing a stronger and more uniform means of disclosing information about the company from whom you may be proposing to purchase a franchise. There are two entities responsible for the evolution of the UFOC: the FTC (Federal Trade Commission), and the NASSA (North American Securities Administrators Association). The most commonly used form for the UFOC comes from NASSA and is accepted by the FTC.
There are 15 states that, in addition to requiring a franchise to have a UFOC before selling franchises, also require that the document be registered with the state. These states are known as registration states.
These states include:
* California
* Hawaii
* Illinois
* Indiana
* Maryland
* Michigan
* Minnesota
* New York
* North Dakota
* Oregon
* Rhode Island
* South Dakota
* Virginia
* Washington
* Wisconsin.
The important thing to realize about the UFOC is that while the document must contain certain required information, such as franchise fees and additional start-up costs, there is no auditing required of this agreement. In other words, the agreement has to be there but is not guaranteed by any third party to be accurate. Additionally, states that are not registered states do not require that a copy of the UFOC be sent to any regulatory agency.
A UFOC is designed to give you the information you need to make an informed decision about whether or not you would like to go into business with the franchise. As such, you can be reasonably sure that the information presented in such an agreement will be accurate. If a franchise blatantly misrepresents the opportunity, there is recourse through the courts. This is not to say that franchises make a practice of misrepresenting what they are offering, but rather a reminder of the age-old adage, "buyer beware". If you know what you are looking at you are much more likely to make a solid decision.
So what good does a UFOC actually do?
A UFOC provides many kinds of information, including information on the company officers and current franchisees as well as financial disclosures. The information provided in this document should give you a good overall picture of what the company is offering and with whom you would be working, but it also gives you resources to check out yourself. There are 23 areas, or items, within a UFOC. One of these items is contact information for current franchises. The importance of a UFOC is that it provides you with all of the information you need to review the franchise itself-but it is by no means end of researching a franchise opportunity.
What the UFOC contains
The UFOC includes information on the franchisor, the key company employees and how much experience in franchise management they bring to the company, as well as bankruptcy and litigation history. You want to know what kind of expertise you are buying into.
In addition, it includes all the information on the investment required for this franchise. This includes initial franchise fees, required equipment fees, start-up estimates, and any required purchases you'll need to make to get started. Suppliers with whom you are required to do business must be disclosed, as well as how much you are expected to contribute to things like the annual advertising budget and how much it should cost to set up your initial inventory.
The UFOC must also contain the legal agreement for trademarks, which products or services may be offered, and any reporting required from the franchisee. The obligations of the both the franchisor and the franchisee will be disclosed, and the rules governing the transfer, termination, and renewal of the franchise agreement are included.
An earnings claim (what you should be able to earn) may or may not be included and is not a required item of the UFOC. If it is included, make sure that the company can verify their claims.
There are other agreements that must be decided between franchisor and franchisee. While some of these agreements may be laid out in the UFOC, others could change depending on the requirements of the individual franchise agreement. Things like protected territory are often decided on an individual basis. In these cases, any other agreements that will be required must be attached to the UFOC, including the individual franchise agreement in its generic form.
What is the Franchise Ufocs Role - To learn more about this author, visit Bob Richman's Website.
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Learn more about the UFOC before buying a franchise. Franchising is a contract system between two parties-the franchisor and the franchisee. As with any contractual agreement, there are legal documents and agreements that must be followed by both parties. The first of these documents is called a UFOC, or Uniform Franchise Offering Circular. Essentially this document is a disclosure of specific types of information that the franchisor must present before any agreements are signed.
The FTC set out the first franchise rules requiring minimum disclosure in 1979, originally known as an offering circular. Since that time the format and content have continued to evolve, providing a stronger and more uniform means of disclosing information about the company from whom you may be proposing to purchase a franchise. There are two entities responsible for the evolution of the UFOC: the FTC (Federal Trade Commission), and the NASSA (North American Securities Administrators Association). The most commonly used form for the UFOC comes from NASSA and is accepted by the FTC.
There are 15 states that, in addition to requiring a franchise to have a UFOC before selling franchises, also require that the document be registered with the state. These states are known as registration states.
These states include:
* California
* Hawaii
* Illinois
* Indiana
* Maryland
* Michigan
* Minnesota
* New York
* North Dakota
* Oregon
* Rhode Island
* South Dakota
* Virginia
* Washington
* Wisconsin.
The important thing to realize about the UFOC is that while the document must contain certain required information, such as franchise fees and additional start-up costs, there is no auditing required of this agreement. In other words, the agreement has to be there but is not guaranteed by any third party to be accurate. Additionally, states that are not registered states do not require that a copy of the UFOC be sent to any regulatory agency.
A UFOC is designed to give you the information you need to make an informed decision about whether or not you would like to go into business with the franchise. As such, you can be reasonably sure that the information presented in such an agreement will be accurate. If a franchise blatantly misrepresents the opportunity, there is recourse through the courts. This is not to say that franchises make a practice of misrepresenting what they are offering, but rather a reminder of the age-old adage, "buyer beware". If you know what you are looking at you are much more likely to make a solid decision.
So what good does a UFOC actually do?
A UFOC provides many kinds of information, including information on the company officers and current franchisees as well as financial disclosures. The information provided in this document should give you a good overall picture of what the company is offering and with whom you would be working, but it also gives you resources to check out yourself. There are 23 areas, or items, within a UFOC. One of these items is contact information for current franchises. The importance of a UFOC is that it provides you with all of the information you need to review the franchise itself-but it is by no means end of researching a franchise opportunity.
What the UFOC contains
The UFOC includes information on the franchisor, the key company employees and how much experience in franchise management they bring to the company, as well as bankruptcy and litigation history. You want to know what kind of expertise you are buying into.
In addition, it includes all the information on the investment required for this franchise. This includes initial franchise fees, required equipment fees, start-up estimates, and any required purchases you'll need to make to get started. Suppliers with whom you are required to do business must be disclosed, as well as how much you are expected to contribute to things like the annual advertising budget and how much it should cost to set up your initial inventory.
The UFOC must also contain the legal agreement for trademarks, which products or services may be offered, and any reporting required from the franchisee. The obligations of the both the franchisor and the franchisee will be disclosed, and the rules governing the transfer, termination, and renewal of the franchise agreement are included.
An earnings claim (what you should be able to earn) may or may not be included and is not a required item of the UFOC. If it is included, make sure that the company can verify their claims.
There are other agreements that must be decided between franchisor and franchisee. While some of these agreements may be laid out in the UFOC, others could change depending on the requirements of the individual franchise agreement. Things like protected territory are often decided on an individual basis. In these cases, any other agreements that will be required must be attached to the UFOC, including the individual franchise agreement in its generic form.
What is the Franchise Ufocs Role - To learn more about this author, visit Bob Richman's Website.
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John PowerJohn Power, founder of Biltmore Franchise Consulting, has extensive experience developing and marketing franchises and business opportunities. He has been in and around franchising for over twenty years. From 1980 through 1990 he conceptualized, organized, and developed the American Video Association. He grew AVA to 2,000 national members, before selling the company it 1990. It was later merged into another home video marketing company. From 2000 to 2005 he worked as a contract marketing and human resources consultant to several local and national companies. In 2005 Mr. Power began working as a franchise development consultant on a full-time basis. Since that time he has helped more than three dozen companies initiate and develop their franchising program. He notes that there are many companies interested in developing a franchise program, and who need his specialized assistance. Mr. Power is a “hands-on” franchise consultant. He said, “I am the ‘nuts and bolts’ person who tends to the details for my clients.” Mr. Power holds a B.S. degree with a major in Marketing. See: www.biltmorefranchise.com You may contact Mr. Power at: jpower@biltmorefranchise.co - Visit John Power's Website |
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Anne BarrAnne Barr has over 26 years experience in sales and marketing, six years as a franchisee. She has assisted over 367 business owners and purchasers to achieve their goals in career change, transition and exit strategy. She holds the designation of Certified Franchise Executive from the International Franchise Association, Certified Business Intermediary from the International Business Brokers Association and Board Certified Broker from the Texas Association of Business Brokers. Anne is active in professional organizations, networking groups and volunteers for non-profit entities. As owner/operator of four successful businesses, Anne has proven people skills and enjoys helping clients find the right "fit" in business ownership. Visit www.FranchiseOpportunitySpecialist.com for more information about me and my company. - Visit Anne Barr's Website |
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John BrennanJohn Brennan Ed.D. Dr. Brennan is President of Interpersonal Development, LLC, a training and development firm. Interpersonal Development has provided sales training and coaching to more than 3,000 sales reps from over 100 companies. A native of Australia, Dr. Brennan received his doctorate from the University of Rochester. His dissertation researched the effectiveness of Behavioral Modeling Technology in training people in interpersonal skills. While he has spent most of his career designing or delivering training, he was also a Vice-President of Sales of a training and development franchise with operations in 25 markets. Dr. Brennan has designed and delivered sales training in North America, Asia, Europe, Australia and the Middle East. He has been a guest speaker at numerous national and regional professional conferences. When Microsoft wanted Best Practices articles on sales for their web site, they called Dr. Brennan. The results are at http://office.microsoft.com/en-us/FX011387391033.aspx His firm’s clients have included Volvo, The Prudential, Merrill Lynch, Eastman Kodak, Gannett, Equifax Europe, the Economist Group and countless small businesses. - Visit John Brennan's Website |
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Jay Kubassek(Jay's Full Bio: EvanCarmichael.com/jaykubassek) In five years, Canadian-born entrepreneur Jay Kubassek went from selling mufflers at a Midas franchise to revolutionizing Internet marketing with the 2004 launch of CarbonCopyPRO, a online marketing education company, now worth over $20 million with customers in over 160 countries.
As an independent film producer, his upstart film fund Aliquot Films is currently producing a films with Spike Lee and Abel Fererra (starring Ethan Hawke and Dennis Hopper.)
Jay's entrepreneurial spirit is irrepressible. He’s the owner of five companies, a professional speaker and trainer, international real estate developer/investor, extreme sport enthusiast and emerging philanthropist. Jay resides in NYC with his wife Jamie, son Milo and dog Cooper. Visit Jay's official website: www.JayKubassek.com - Visit Jay Kubassek's Website |
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