The Franchise Disclosure Document.
As a prospective business owner, you need to know what the legal issues are that could affect you, your family, and your new business.
When
it comes to franchising, the Federal Trade Commission
requires all franchise companies that are registered in the
United States to have a document called,
This legal document must contain 23 items of information for you, the prospective buyer.
Some of the information includes:
1. The business experience and background of company officers
2. Any current or pending litigation
3. Initial Investment {broken down specifically}
4. List of all franchise owners currently in the system
5. List of all franchise owners that have left the system in the past 12 months
6. Obligations of the franchisor, and of the franchisees
These are just a few of the items that are included in the FDD.
It is recommended that you consult with an attorney is familiar in franchise law in the United States, when you are at the point in your investigation when you are getting serious about investing in the business.
* In July of 2008 a new rule took effect. It changed some aspects of the original disclosure document that was called the UFOC.
The Law Firm of DLA-Piper lays the changes out nicely, Here.
