The Franchising Process – Part I

HowStuffWorks.com:

Once you contact a franchisor for more information, these are the steps that will typically follow:

1. The franchisor will send you brochures and other materials, and most likely request that you complete a questionnaire. You will proceed based on the outcome of that exchange of information.

2. The next step will be your evaluation of the company’s Uniform Franchise Offering Circular (UFOC). The Federal Trade Commission (FTC) requires this document be provided to disclose detailed information about the franchisor at least 10 days prior to any franchise purchase. That information includes:

* The franchisor, its predecessors and its affiliates;
* Business experience/history;
* Litigation;
* Bankruptcy;
* Initial franchise fee;
* Other fees;
* Initial investment;
* Restrictions on sources of products and services;
* Franchisee’s obligations;
* Financing;
* Franchisor’s obligations;
* Territory;
* Trademarks;
* Patents, copyrights and proprietary information;
* Obligation to participate in the actual operation of the franchise business;
* Restrictions on what the franchisee may sell;
* Renewal, termination, transfer and dispute resolution;
* Public figures;
* Earnings claims;
* List of outlets;
* Financial statements;
* Contracts;
* Receipts.

For more information about deciphering the UFOC, visit Franchise411.com.