Uniform Franchise Offering Circular

Evaluate a uniform franchise offering circular to select the best franchising investment

Since 1979, federal franchise law has required franchisers to give a document known as the Uniform Franchise Offering Circular (UFOC) to franchisees before any contract is signed or any money exchanged. UFOCs contain detailed information about a franchiser, which is intended to give educated information to aid a potential franchisee in deciding whether or not to invest in a particular franchise.

A revised Federal Trade Commission (FTC) rule that governs franchise disclosure documents became effective July 1, 2008. As a result, the Uniform Franchise Offering Circular is now known as the Franchise Disclosure Document. The new FTC rule imposes new requirements for the contents of a franchise offering circular but the basic substance of the UFOC remains the same.

1. Critically appraise the basics of a uniform franchise offering circular.

2. Compare several franchises before selecting a uniform franchise offering circular.

3. Ask for advice and tips from experienced professionals before choosing a franchise circular.

 

Assess the basics of the franchise offering circular

The more you know, the better prepared you are to make the best decision for your franchise investment needs. To better appraise any UFOCs, brush up on the document's purpose and its requirements. This way you won't be surprised by anything as the process progresses and you'll catch any missing or extra bits before moving forward.
Try: Check out UFOC basics, guidelines and forms at the North American Securities Administrators Association (NASAA) website. NASAA periodically reviews and publishes the uniform franchise offering circular. A UFOC primer like Franchise Help provides useful information, allows you to search for franchise disclosure documents and offers a free newsletter.

Compare potential franchise opportunities before signing a uniform franchise offering circular

All franchises are not created equal. From the amount of money required for investment to the type of support you receive from the parent company, there are a myriad of things to consider. Review more than one UFOC and compare your options before signing on the dotted line.
Try: Frandata provides a franchise directory, franchise offering primer information, and a search engine to look up franchises by name and industry. Entrepreneur.com ranks the top 500 franchises in the United States and supplies links to request more information from many of them.

Contact an expert to help you understand the franchise offering circular's fine print

Carefully review and understand the UFOC before buying a franchise. The FTC does not review individual circular offerings for accuracy nor does it evaluate whether the information disclosed by the franchise is true. To make matters even trickier, each state has its own set of laws pertaining to franchises. While franchisees are subject to civil penalties for false information obtained in the uniform franchise circular offering, save yourself the time and trouble if and consult a professional to advise you of what you're getting into before you complete the deal.
Try: Locate franchise attorneys, consultants, service providers and minority opportunities at Source Book Publications. Visit FranchiseHandbook.com and select one of their many featured consultants who can help you read through your UFOC to make sure your investment is a good one.

 

• Several non-profit organizations assist individuals in making the most of their uniform franchise offering circular. Take advantage of these organizations, especially if it is your first time starting or owning a business.

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