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Read All About It

Find the answers to your franchise questions in the UFOC.

When you sit down to talk seriously with a franchisor about the purchase of a franchise, you will no doubt have hundreds of questions about the investment: everything from the territorial rights you will receive and the amounts you will pay to the duration of the initial training. You can also assume there are another couple hundred questions that you will not think to ask.

Luckily for you, the franchisor is required by law to provide you with many of the answers--both to the questions you ask and those that might not occur to you--in the form of the Uniform Franchise Offering Circular (UFOC).

The UFOC document is a mother lode of investor information, designed to give prospective franchisees all the information relevant to the franchise offering. The UFOC contains the facts state and federal regulators consider important to your decision whether to buy the franchise. The UFOC is designed to protect you, the investor, and you will find it enormously helpful.

The UFOC is made up of three basic sections sandwiched together: first, 23 sections describing various aspects of the franchise program; second, a set of the franchisor's audited financial statements; and third, a copy of each form or contract you will sign if you buy the franchise.

State and federal franchise laws require that a franchisor deliver a copy of this document to you at the first personal face-to-face meeting with you or 10 business days before the contract is signed or money is paid, whichever happens first. This means you may not receive a UFOC simply by requesting it (although some franchisors will send one on request), but you should certainly receive a copy well before you are asked to pay money or sign a binding contract. Ask the franchisor for one early in your investigation; it may save you a great deal of time.


Andrew A. Caffey is an attorney in the Washington, DC, area, a former general counsel of the International Franchise Association and an internationally recognized specialist in franchise and business opportunity law. Contact him at acaffey@compuserve.com

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This article was originally published in the March 1998 print edition of Entrepreneur with the headline: Read All About It.

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