The Federal Trade Commission (FTC) requires each franchise to make full and frank disclosure regarding 23 key franchise information items the FTC deems important to any considering an investment in a franchise, that document is commonly referred to as the Uniform Franchise Offering Circular or UFOC.
The UFOC was a response to exploitation by unethical individuals and con artists in the 60’s and 70’s.
Franchises are regulated by law.
The FTC requires franchisors in every state to provide a UFOC. In addition, some states require that the offering must be first approved and registered by the state before it can be promoted to perspective franchise buyers.
Although the FTC requires specific franchise information be given to the prospective franchisee, note that the FTC does not check the franchise information and will not vouch for its accuracy. Nothing will take the place of your own investigative activities.
Some UFOC Tips:
• The financial statements of a new franchise system will probably not be very impressive, since they have no opportunity to establish a track record. In this case, concentrate more on evaluating the business concept and the management team.
• The UFOC is a great tool to learn specific franchise information.
• Review this document with your Attorney and Accountant.
• Two important questions that should be answered in the UFOC are: Is the franchisee obligated to buy any or all its supplies from the franchisor or from approved vendors? If not, do franchisee-chosen suppliers have to be approved?
• Most major points of the franchise agreement will not be negotiated by the franchisor, if there is something you are unclear request the franchisor clarify their position.
Franchise information that is pertinent to your investigation is disclosed in the Uniform Franchise Offering Circular (UFOC). - To learn more about this author, visit Jim Coen's Website.
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Jim Coen
(Visit Jim's Website)
With 25 years of franchise, marketing, and
entrepreneurial experience, and the owner
of Franchise Perfection, Jim Coen, brings
key skills to franchise consulting for
those interested in buying a franchise
business opportunity.
At Franchise Perfection we serve as
franchise consultants and advisers,
“matching you with the perfect business”.
Visit: www.franchiseperfection.com/ind
ex.htm
For over 20 years Jim worked with Super
Coups. which is a MA based direct mail
franchise that delivers money saving
coupons from local businesses to your
mailbox. His responsibilities at Super
Coups included: franchise marketing,
franchise training, sales management,
regional sales, and director of Franchise
Development.
Prior to Super Coups Jim successfully
marketed franchises in the New England
area for Uniglobe Travel Northeast a
travel franchise, Merry Maids a maid
cleaning franchise, & Emack & Bolio an Ice
Cream franchise.
Jim recently was the host of a popular
radio show called “Let’s Talk Franchising”
that aired on WBIX 1060 in Boston.
Jim currently serves on the Board of
Directors of the New England Franchise
Association (NEFA) www.nefranchis
e.org
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Let's Talk Franchising! - I have learned franchising from the ground up. I’ve been a franchisee for a bad franchisor. I’ve worked for good franchisors and I’ve worked for marginal franchisors. I’ve helped many franchisees succeed.
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