{"id":619,"date":"2008-08-04T07:44:00","date_gmt":"2008-08-04T07:44:00","guid":{"rendered":"https:\/\/expandsmtest.com\/franchiseking\/franchise-legal\/"},"modified":"2021-11-22T16:34:02","modified_gmt":"2021-11-22T21:34:02","slug":"franchise-legal","status":"publish","type":"post","link":"https:\/\/www.thefranchiseking.com\/franchise-legal","title":{"rendered":"Franchise Legal Magic. The UFOC Disappears!"},"content":{"rendered":"

<\/a><\/p>\n

The month of July marked the end of the infamous Uniform Franchise Offering Circular.
\n{UFOC}<\/em><\/p>\n

POOF!<\/strong><\/span><\/p>\n

Rest In Peace……. <\/strong><\/em><\/p>\n

<\/p>\n

The Uniform Franchise Offering Circular<\/strong> has been slammed by industry and non industry types for years.This required reading document for prospective franchisees although pretty darn boring, is really important. It was just revamped, and renamed. The FDD, or Franchise Disclosure Document. It has some changes, which are pretty positive for the consumer. I discussed the “boring” factor a bit on the MSNBC Business Blog<\/strong>, recently.<\/p>\n

When the Federal Trade Commission overhauled its \u201cFranchise Rule\u201d last year, it came up with this new disclosure format<\/em>. It was one which adopted the UFOC<\/strong> disclosure requirements, but added<\/em> to them as well.
\n
\nThese are the items that are to be included in every FDD:<\/strong><\/p>\n

1. The Franchisor, its Predecessors and Affiliates<\/p>\n

2. Business Experience<\/p>\n

3. Litigation<\/p>\n

4. Bankruptcy<\/p>\n

5. Initial Franchise Fee<\/p>\n

6. Other Fees<\/p>\n

7. Initial Investment<\/p>\n

8. Restrictions on Sources Of Products And Services<\/p>\n

9. Franchisee\u2019s Obligations<\/p>\n

10. Financing<\/p>\n

11. Franchisor\u2019s Obligations<\/p>\n

12. Territory<\/p>\n

13. Trademarks<\/p>\n

14. Patents, Copyrights and Proprietary Information<\/p>\n

15. Obligation To Participate In The Actual Operation Of The Franchise Business<\/p>\n

16. Restrictions On What The Franchisee May Sell<\/p>\n

17. Renewal, Termination, Transfer And Dispute Resolution<\/p>\n

18. Public Figures<\/p>\n

19. Earnings Claims<\/p>\n

20. List Of Outlets<\/p>\n

21. Financial Statements<\/p>\n

22. Contracts<\/p>\n

23. Receipt
\n
\nThe major differences between the now old UFOC, and the new FDD are:<\/strong><\/p>\n

1. The new law encourages more disclosure<\/a> about earnings. Information about business costs can be freely disclosed, and financial results can be given in the FDD for a subset of franchisees without having to compare them to the entire chain.
\n2. The FDD and other informational documents may be sent electronically\u2013a change that will really save franchisors money and maybe even encourage them to send information to prospects sooner.{It is also pretty darn Green!}
\n3. Franchisors must disclose contact information for all of the franchisee associations in their system, including ones approved by the franchisor as well as independent associations. Before, prospects had to find independent associations on their own.
\n4. If a franchisor\u2019s corporate parent guarantees the business or provides supplies to franchisees, its contact and financial information has to be disclosed. Previously, corporate parents did not have to be disclosed, at all.
\n5. More litigation disclosure is now required. Franchisors must list suits they\u2019ve filed against franchisees over the previous year.<\/em><\/p>\n

The FDD is a welcome change to the UFOC, which has been around for many years, and should provide a little more transparency for potential franchise buyers.<\/p>\n","protected":false},"excerpt":{"rendered":"

The month of July marked the end of the infamous Uniform Franchise Offering Circular. {UFOC} POOF! Rest In Peace…….<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","footnotes":""},"categories":[26],"tags":[],"class_list":["post-619","post","type-post","status-publish","format-standard","hentry","category-franchise-law"],"yoast_head":"\nFranchise Legal Magic. The UFOC Disappears! — The Franchise King\u00ae<\/title>\n<meta name=\"description\" content=\"Franchise Legal Magic. 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