A Uniform Franchise Offering Circular (UFOC), now called a Franchise Disclosure Document (FDD) is a disclosure document that the Federal Trade Commission (FTC) requires franchisors to give potential franchisees before granting a franchise.

What Must Be Disclosed in the UFOC?

Some basic disclosures that must be made in the UFOC are:

  • A description of the business, as well as any management and partners who would have management responsibilities over the franchisees.
  • Any litigation or bankruptcy hearings that have taken place in the last 10 years concerning the franchisor or affiliates.
  • Any and all payments the franchisee must make to open and continue running the franchise branch.
  • An estimation of the initial investment the franchisee will have to make, along with any purchases that must be made according to the franchisor’s estimations.
  • The duties and obligations of the franchisee under the agreement.
  • The duties and obligations of the franchisor under the agreement, including any funding the franchisor will provide to the franchisee.
  • The location of the franchise, as well as a description of the territory.
  • Restrictions on the franchisee, including what may be sold and who it may be sold to.
  • The length of time of the franchise license, as well as the renewal process, if any.
  • Contact information as well as fiscal performance records and expectations for at least 100 other franchisees.
  • Financial records for the past 2 fiscal years.
  • Samples of all contracts the franchisee must sign.

Should I Acquire the Services of an Attorney When Going through a UFOC in Preparation for Becoming a Franchisee?

Setting up a franchise branch can be an incredibly complex process that has many legal consequences. A business attorney who has experience dealing with franchise contracts and UFOCs can be invaluable to help a potential franchisee negotiate fair terms that are in the best interest of the franchisee.