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UFOCs: There To Protect Potential Franchisees

The unethical business practices of some franchisors, especially in the 1960’s and 1970’s forced the federal government agency to come up with a new guideline to safeguard the interests of new franchisees and budding entrepreneurs. Hence, the Uniform Franchise Offering Circular (UFOC) arrived that every franchisor, irrespective of its type, size or name, has to submit. It is a detailed document giving 23 points about their franchise proposal. This is mandatory for 35 states of the United States. Once the franchisor has a current UFOC, it presents that to the franchisee. Some 10 days before any agreement is signed, the company can go ahead with the franchise business. In the remaining 15 states, they have to satisfy local government laws along with the UFOC to carry out business.

Some of the 23 points that are included in UFOC are
1. The Franchisor, It’s Predecessors And Affiliates
2. Litigation
3. Bankruptcy (if filed)
4. Initial Franchise Fee
5. Restrictions On Sources
6. Franchisor’s Obligations
7. Territory
8. Patents, Copyrights and Proprietary Information
9. Renewal, Termination, Transfer And Dispute Resolution
10. Earnings Claims
11. Financial Statements
12. Contracts
and obviously the receipt. These are some of the points and details that should be noted before going further with the franchise offer. A franchisee should read the whole document carefully three times before committing on the project. The law has been introduced to his benefit and he should not waste it by casually reading the UFOC and overlooking small yet vital information.

The franchisee must clear those parts of the UFOC with the franchisor that he can’t understand. If the company had faced any legal problem in the past, the franchisee must note the reason for it as well. Another thing to look for is the fees and initial costs that the company is asking for. If the franchisee is not sure whether he can get the amount, then he should not proceed with the plan. Another point for which the UFOC should be his bible is that, it will say all about what the franchisor will do on his part.

If you want to know more regarding the topic, get in touch with brandEXPANSION and its associates.

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