The UFOC is the most important document in the franchising world. If you are thinking of entering the franchising market and looking for prospective franchisors, the document that you are supposed to go through minutely is the UFOC. Each franchisor must give you minimum 10 days to read the UFOC, before asking you to sign any paper. For a layman, the UFOC can be a very daunting task; it has so many sections that it can confuse a newcomer. So, the best way to read the UFOC is by taking the help of your lawyer and your accountant. In addition, you can also go through the following paragraphs in order to understand the UFOC in a nutshell.
The UFOC has many sections – totaling 23. Broadly speaking, it can be divided into the following parts:
1. Sections on the franchisor: The total background of the company will be given in theses sections UFOC. Going through the sections, you will learn about the history of the company along with the business experience it has. These sections will also make you aware whether this company was brought from someone else or was formed as a merger. You will also know about the people who are running the show and their educational as well as other qualifications. The sections will also include the history of litigation the company has faced and whether the people responsible have experienced any bankruptcy or other cases in the past. Then there will be section on the past and present franchisees of the company and the number of franchisees that have been closed down or resold. The section will also include the status of the patent, copyright, trademark and proprietary information regarding the products/services as well as the brand name of the company. The sections are 1 to 4, 13, 14 and 20.
2. Sections on the franchisee and franchisor relationship: These sections will spell what the franchisor will do for the franchisees and what they are required to do in return. You will also know about the products it can sell and from where it can source the material. Moreover, you will learn about the agreement period and whether you can have an exclusive territory or not. Some sections will speak about how any dispute among the franchisees or between the franchisor and franchisee will be settled. The sections are 8,9,11,12,15,16 and 17.
3. The financial aspects and fees: The fees and other charges the franchisees have to pay are discussed in these sections. Besides, the sections will also include the financial statement of the franchisor, earning claim (if there’s any) and also any financial program the company offers. The sections are 5, 6,7,10, 19 and 21.
4. There are some extra sections like 18 that say which public figure is associated with the franchisor. Section 22 talks about any contract that you may have to sign whereas Section 23 is a receipt that you received the UFOC.
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Explaining the UFOC - To learn more about this author, visit Ray Flores's Website.
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