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How To Read A UFOC

What do all those items mean . . . in plain English?

The first step to investigating any franchise is to get your hands on the system's Uniform Franchise Offering Circular. Don't be intimidated by the formal name of the document (just call it the UFOC) or the somewhat hefty stack of papers it contains. The UFOC is a lot less scary than it looks. To prove it, we've broken down exactly what information all the sections, titled Items, contain. Once you see how simple the UFOC really is to read, you'll find it's one of your best tools for franchise research and comparison.

Items 1 through 4: The franchisor's background, the experience of key executives and the company's litigation and bankruptcy history

Items 5 and 6: All the fees charged by the franchisor

Item 7: An estimate of the total investment needed to establish the business

Item 8: Restrictions on the purchase of products to be used and sold in the unit

Item 9: The franchisee's obligations

Item 10: Financing that the franchisor makes available

Item 11: A summary of the services, such as training and site selection, that the franchisor provides in relation to the franchise program

Item 12: Territorial protections

Items 13 and 14: The status of the trademarks, copyrights and patents associated with the program

Item 15: Obligations of the franchisee to participate in the actual operation of the franchised business

Item 16: Restrictions on what the franchisee can sell

Item 17: Renewal, termination, transfer and dispute resolution provisions

Item 18: Public figures used to promote the franchise

Item 19: A description of how well the franchises perform financially

Item 20: System statistics and lists of franchisees and former franchisees

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