Understanding the Uniform Franchise Offering Circular (UFOC)

Uniform Franchise Offering Circular, or UFOC in general, is a legal document that the franchisors give to their franchisee before any contract is signed between them. Usually, the UFOC is given at least 10 business days before the legal contract is signed & any money changes hands according to the present laws in the USA. The UFOC contains information such as franchisor profile which gives the franchisees enough insight into the business they are franchising & educates them about their investments in the franchise. The UFOC has atleast these 23 sections with detailed information:

• The Franchisor, its Predecessors & Affiliates
• Identity & Business Experience of Key Persons
• Litigation History
• Bankruptcy
• Initial Franchise Fee
• Other Fees & Expenses (if any)
• Franchisee's Initial Investment
• Restrictions on Sources of Products & Services
• Obligations of the Franchisee
• Financing Arrangements
• Obligations of the Franchisor
• Territory to be covered
• Trademarks ownned
• Patents and Copyrights claimed
• Obligation of the Franchisee to Participate in the Actual Operation of the Franchise Business
• Restrictions on Goods and Services Offered by the Franchisee
• Renewal, Termination, Repurchase, Modification and/or Transfer of the Franchise Agreement
• Public Figures
• Earnings Claims
• List of Franchise Outlets
• Financial Statements
• Contracts
• Acknowledgment of Receipt

A new rule by the Federal Trade Commission (FTC) of USA names UFOC as Franchise Disclosure Document, or FDD, and imposes new requirements for its contents & disclosure of information failing which franchisors may face penalties & lawsuits.