Understanding the UFOC and Franchising Laws
Overview of
The offer and sale of a franchise is regulated at both the
federal and state level. At the federal level, the Federal Trade Commission
(FTC) in 1979 adopted its trade regulation rule 436 (the "FTC Rule")
which specifies the minimum amount of disclosure that must be made to a
prospective franchisee in any of the fifty states. In addition to the FTC Rule,
over a dozen states have adopted their own rules and regulations for the offer
and sale of franchises within their borders. Known as the registration states,
they include most of the nation's largest commercial marketplaces, such as
The UFOC was originally developed by the Midwest Securities Commissioners Association in 1975. The monitoring of and revisions to the UFOC are now under the authority of the North American Securities Administrators Association (NASAA). Each of the registration states has developed and adopted its own statutory version of the UFOC. The differences among the states should be checked carefully by both current and prospective franchisors and their counsel, as well as individuals considering the purchase of a franchise opportunity.
A new version of the UFOC was adopted by NASAA in April of 1993 and approved by the FTC in December of 1993. As of January 1, 1995, the registration states had approved the new UFOC and mandated its use for filings in their states. The new UFOC Guidelines ("Guidelines") require that the offering circular be written in plain English. Disclosures must be made clearly, concisely and in a narrative form that is understandable by a person unfamiliar with the franchise business and should not contain technical language, repetitive phrases or "legal antiques."
Brief History of Franchise Registration
The laws governing the offer and sale of
franchises began in 1970, when the state of
The states that require full registration of a franchise offering prior to the offering or selling of a franchise are California, Illinois, Indiana, Maryland, Minnesota, New York, North Dakota, Rhode Island, South Dakota, Virginia, and Washington.
Other states that regulate franchise offers include Hawaii, which requires filing of an offering circular with the state authorities and delivery of an offering circular to prospective franchisees; Michigan and Wisconsin, which require filing of a Notice of Intent to Offer and Sell Franchises; Oregon, which requires only that pre-sale disclosure be delivered to prospective investors; and Texas, which requires the filing of a notice of exemption with the appropriate state authorities under the Texas Business Opportunity Act.
Among other things, the FTC Rule requires that every franchisor offering franchises in the United States deliver an offering circular (containing certain specified disclosure items) to all prospective franchisees (within certain specified time requirements). The FTC has adopted and enforced its rule pursuant to its power and authority to regulate unfair and deceptive trade practices. The FTC Rule sets forth the minimum level of protection that shall be afforded to prospective franchisees. To the extent that a registration state offers its citizens a greater level of protection, the FTC Rule will not preempt state law. There is no private right of action under the FTC Rule; however, the FTC itself may bring an enforcement action against a franchisor that does not meet its requirements. Penalties for noncompliance have included asset impoundments, cease and desist orders, injunctions, consent orders, mandated rescission or restitution for injured franchisees, and civil fines of up to $10,000 per violation.
The FTC Rule regulates two types of offerings: (1) package and product franchises and (2) business opportunity ventures. The first type involves three characteristics: (i) the franchisee sells goods or services that meet the franchisors quality standards (in cases where the franchisee operates under the franchisors trademark, service mark, trade name, advertising, or other commercial symbol designating the franchisor (mark)) that are identified by the franchisors Mark, (ii) the franchisor exercises significant assistance in the franchisees method of operation, and (iii) the franchisee is required to make payment of $500 or more to the franchisor or a person affiliated with the franchisor at any time before to within six months after the business opens.
Business Opportunity Ventures also involve three characteristics : (i) the franchisee sells goods or services that are supplied by the franchisor or a person affiliated with the franchisor; (ii) the franchisor assists the franchisee in any way with respect to securing accounts for the franchisee, or securing locations or sites for vending machines or rack displays, or providing the services of a person able to do either; and (iii) the franchisee is required to make payment of $500 or more to the franchisor or a person affiliated with the franchisor at any time before to within six months after the business opens.
Relationships covered by the FTC Rule include those within the definition of a franchise and those represented as being within the definition when the relationship is entered into, regardless of whether, in fact, they are within the definition. The FTC Rule exempts 1) fractional franchises, 2) leased department arrangements, and 3) purely verbal agreements. The FTC Rule excludes 1) relationships between employer/employees and among general business partners, 2) membership in retailer-owned cooperatives, 3) certification and testing services, and 4) single trademark licenses.
Among other things, the FTC Rule requires that every franchisor offering franchises in the United States deliver an offering circular (containing certain specified disclosure items) to all prospective franchisees (within certain specified time requirements). The FTC has adopted and enforced its Rule pursuant to its power and authority to regulate unfair and deceptive trade practices. The FTC Rule sets forth the minimum level of protection which shall be afforded to prospective franchisees. There is no private right of action under the FTC Rule, however, the FTC itself may bring an enforcement action against a franchisor which does not meet its requirements. Penalties for noncompliance have included asset impoundments, cease and desist orders, injunctions, consent orders, mandated rescission or restitution for injured franchisees and civil fines of up to $10,000 per violation.
The information must be current as of the completion of the franchisors most recent fiscal year. In addition, a revision to the document must be promptly prepared whenever there has been a material change in the information contained in the document. The FTC Rule requires that the disclosure document must be given to a prospective franchisee at the earlier of either 1) the prospective franchisees first personal meeting with the franchisor; or 2) ten business days prior to the execution of a contract; or 3) ten business days before the payment of money relating to the franchise relationship. In addition to the disclosure document, the franchisee must receive a copy of all agreements that it will be asked to sign at least five business days prior to the execution of the agreements. A business day is any day other than Saturday, Sunday, or the following national holidays: New Yearns Day, Washingtons Birthday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving, and Christmas.
The timing requirements described above apply nationwide and preempt any lesser timing requirements contained in state laws. The ten-day and five-day disclosure periods may run concurrently, and sales contacts with the prospective franchisee may continue during those periods.
It is an unfair or deceptive act or practice within the meaning of Section 5 of the FTC Act for any franchisor or franchise broker:
1. To fail to furnish prospective franchisees, within the time frame established by the Rule, with a disclosure document containing information on twenty different subjects relating to the franchisor, the franchise business, and the terms of the franchise agreement
2. To make any representations about the actual or potential sales, income, or profits of existing or prospective franchisees except in the manner set forth in the rule
3. To fail to furnish prospective franchisees, within the time frame established by the rule, with copies of the franchisors standard form of franchise agreement and copies of the final agreements to be signed by the parties
4. To fail to return to prospective franchisees any funds or deposits (such as down payments) identified as refundable in the disclosure document
State Franchise Laws
The goal of the FTC Rule is to create a minimum federal standard of disclosure applicable to all franchisor offerings and to permit states to provide additional protection as they see fit. Thus, while the FTC Rule has the force and effect of federal law and, like other federal substantive regulations, preempts state and local laws to the extent that these laws conflict, the FTC has determined that the rule will not preempt state or local laws and regulations that either are consistent with the rule or, even if inconsistent, would provide protection to prospective franchisees equal to or greater than that imposed by the rule.
Examples of state laws or regulations that would not be preempted by the Rule include state provisions requiring the registration of franchisors and franchise salespersons, state requirements for escrow or bonding arrangements, and state‑required disclosure obligations set forth in the Rule. Moreover, the Rule does not affect state laws or regulations that regulate the franchisor/franchisee relationship, such as termination practices, contract provisions, and financing arrangements.
Definitions Under State Law
Each state franchise disclosure statute has its own definition of a "franchise," which is similar to, but not the same as, the definition set forth in the FTC Rule. If the proposed relationship meets this definition, then the franchisor must comply with the applicable registration and disclosure laws.
There are three major types of state definitions of a franchise or business opportunity. They consist of:
A.
1. A franchisee is granted the right to engage in the business of offering, selling, or distributing goods or services under a marketing plan or system prescribed in substantial part by a franchisor.
2. The operation of the franchisees business . . . is substantially associated with the franchisors trademark or other commercial symbol designating the franchisor or its affiliate.
3. The franchisee is required to pay a fee.
B.
1. A franchisee is granted the right to engage in the business of offering or distributing goods or services using the franchisors trade name or other commercial symbol or related characteristics.
2. The franchisor and franchisee have a common interest in the marketing of goods or services.
3. The franchisee pays a fee.
C.
1. The franchisor is paid a fee by the franchisee.
2. Either essentially associated with the franchisors trademark or the franchisee operates under a marketing plan or system prescribed in substantial part by the franchisor.
D.
1. A franchisee is granted the right to engage in the business of offering or distributing goods or services at retail under a marketing plan or system prescribed in substantial part by a franchisor.
2. The franchisees business is substantially associated with the franchisors trademark.
Understanding the UFOC Disclosure Document
The UFOC format of franchise disclosure consists of 23 categories of information that must be provided by the franchisor to the prospective franchisee at least ten business days prior to the execution of the franchise agreement. Because this format has been adopted by many states as a matter of law, franchisors may not change the order in which information is presented, nor may any of the disclosure items be omitted in the document. In addition, many sections of the UFOC must be a mirror image of the actual franchise agreement (and related documents) that the franchisee will be expected to sign. There should be no factual or legal in consistencies between the UFOC and the franchise agreement.
Preparing the Disclosure Document Under UFOC Guidelines
The UFOC format of franchise disclosure consists of 23 categories of information that must be provided by the franchisor to the prospective franchisee at least ten business days prior to the execution of the franchise agreement. Because this format has been adopted by many states as a matter of law, franchisors may not change the order in which information is presented, nor may any of the disclosure items be omitted in the document. In addition, many sections of the UFOC must be a mirror image of the actual franchise agreement (and related documents) that the franchisee will be expected to sign. There should be no factual or legal in consistencies between the UFOC and the franchise agreement.
A description of the information required by each disclosure item of the UFOC is as follows:
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Cover Page: |
NASAA has sought to create
a generic cover page by moving state-specific information to Item 23
(Receipt) or to exhibits to the offering circular. Information moved off of the cover page
includes state-mandated language regarding offering circular delivery
requirements and related disclaimers, addresses of administrators and the
list of registered agents, subfranchisors and franchise brokers. The
Guidelines mandate disclosure of certain risk factors. A franchisor must use
prescribed language to disclose as a risk that its franchise agreement
includes an out-of-state form and/or choice of law provision. Additional risk
factor disclosures may be required by state regulators. |
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Item 1: |
The
Franchisor, Its Predecessors And Affiliates. Franchisors must identify themselves by
using we, initials or two words of reference. Franchisor and Franchisee are not be
used. The entities for which disclosure must be made are expanded to include
franchisors affiliates. The number of years of the franchisors predecessors
is reduced from 15 to 10. Agents for service of process may be disclosed in
Item 1, Item 23 (Receipt) or an exhibit to the offering circular. In
addition, franchisors must disclose, in general terms, any regulations
specific to the industry in which the franchise business operates. Regulations
which are applicable to businesses generally need not be disclosed. |
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Item 2: |
Business
Experience.
This section requires disclosure of the identity of each director, trustee,
general partner (where applicable) and officer or manager of the franchisor
who will have significant responsibility in connection with the operation of
the franchisors business or in the support services to be provided to
franchisees. The principal occupation of each person listed in Item 2 for the
past five years must be disclosed, including dates of employment, nature of
the position, and the identity of the employer. The identity and background
of each franchise broker (if any) authorized to represent the franchisor must
also be disclosed in this Item. |
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Item 3: |
Litigation. A full and frank
discussion of any litigation, arbitration, or administrative hearings
affecting the franchisor, its officers, directors, or sales representatives
over the past ten years should be included in this section. The formal case
name, location of the dispute, nature of the claim, and the current status of
each action must be disclosed. Item 3 does not require disclosure of all
types of litigation but rather focuses on specific allegations and
proceedings that would be of particular concern to the prospective
franchisee. Ordinary routine litigation incidental to the business is not
to be considered material. Litigation is deemed ordinary routine if it
ordinarily results from the business and does not depart from the normal
kind of actions in the business. |
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Item 4: |
Bankruptcy. This section requires
the franchisor to disclose whether the company or any of its predecessors,
officers, or general partners, have during the past ten years been adjudged
bankrupt or reorganized due to insolvency. The court in which the bankruptcy
or reorganization proceeding occurred, the formal case title, and any
material facts and circumstances surrounding the proceeding must be
disclosed. |
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Item 5: |
Initial
Franchise Fee. The initial franchise fee and related payments to the franchisor
prior to opening the franchise must be disclosed in this section. The manner
in which the payments are made, the use of the proceeds by the franchisor,
and whether or not the fee is refundable in whole or in part must be
disclosed. If the initial franchise fee is not uniform, the franchisor must
disclose the formula or range of initial fees received by it in the most
recent fiscal year prior to the application date. |
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Item 6: |
Other
Fees. A
tabular form of any other initial or recurring fee payable by the franchisee
to the franchisor or any affiliate must be disclosed and the nature of each
fee fully discussed, including but not limited to, royalty payments, training
fees, audit fees, public offering review fees, advertising contributions, mandatory
insurance requirements, transfer fees, renewal fees, lease negotiation fees,
and any consulting fees charged by the franchisor or an affiliate for special
services. The amount, time of the payment, and refundability of each type of
payment should be disclosed. A remarks column or footnotes may be used to
elaborate on the information about the fees disclosed in the table. In
addition, if fees are paid to a franchisee cooperative, the franchisor must
disclose the voting power of its outlets in the cooperative. Further, the
range of any fees imposed by that cooperative must be disclosed if the
franchisors outlets have controlling voting power. |
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Item 7: |
Initial
Investment.
Each component of the franchisees initial investment that the franchisee is required
to expend in order to open the franchised business must be estimated in this
section, in a prescribed tabular form, regardless of whether such payments
are made directly to the franchisor. Real estate, equipment, fixtures,
security deposits, inventory, construction costs, working capital, accounting
and legal fees, license and permit fees, and any other costs and expenditures
should be disclosed. The disclosure should include to whom such payments are
made, under what general terms and conditions, and what portion, if any, is
refundable. A payment must be disclosed if it is required to be paid during
the initial phase of the business. The Guidelines instruct that [a]
reasonable time for the initial phase of the business is at least three
months or a reasonable period for the industry. The Guidelines also require
disclosure of additional funds required during the initial phase and the
factors, basis and experience upon which the franchisor bases its
calculation. |
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Item 8: |
Restrictions
on Services of Products and Services. Any obligation of the franchisee to purchase
goods, services, supplies, fixtures, equipment, or inventory that relates to
the establishment or operation of the franchised business from a source
designated by the franchisor should be disclosed. The terms of the purchase
or lease as well as any minimum-volume purchasing requirements must be
disclosed. If the franchisor will or may derive direct or indirect income
based on these purchases from required sources, then the nature and amount of
such income must be fully disclosed. Remember that such obligations must be
able to withstand the scrutiny of |
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Item 9: |
Franchisees
Obligations Franchisors must set forth the
franchisees obligations in a prescribed tabular form with regard to 24
specific categories. The table must cite the relevant sections of both the
franchise agreement and offering circular. |
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Item 10: |
Financing. In this section, the
franchisor must disclose the terms and conditions of any financing
arrangements offered to franchisees either by the franchisor or any of its
affiliates. The exact terms of any direct or indirect debt financing,
equipment or real estate leasing programs, operating lines of credit, or
inventory financing must be disclosed. If any of these financing programs is
offered by an affiliate, then the exact relationship between the franchisor
and the affiliate must be disclosed. Terms that may be detrimental to the
franchisee upon default, such as a confession of judgment, waiver of
defenses, or acceleration clauses, must be disclosed in this Item of the
UFOC. The terms and conditions of indirect offers of financing made to
franchisees must be disclosed. An indirect offer of financing includes: 1)
a written arrangement between the franchisor, or its affiliate, and a lender
for the lend to offer financing to franchisees; 2) an arrangement in which
the franchisor or its affiliate receives benefits from a lender for
franchisee financing; and 3) the franchisors guarantee of a note, lease or
obligation of the franchisee. Franchisors are permitted, but not required, to
make disclosure in tabular form. Franchisors must disclose the annual
percentage rate of interest (APR) charged for financing, computed in
accordance with Sections 106-107 of the Consumer Protection Credit Act, 15
U.S.C. (sections) 106-107. If the APR varies depending on when the financing
is issued, franchisor must disclose the APR as of a disclosed recent date.
Franchisor must disclose to the franchisee the consequences of any default of
its obligations, including operation of any cross-default provisions,
acceleration of amounts due, and payment of court costs and attorneys fees.
In addition, Franchisors must include in the offering circular specimen
copies of any financing documents. |
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Item 11: |
Franchisors
Obligations.
This section is one of the most important to the prospective franchisee
because it discusses the initial and ongoing support and services provided by
the franchisor. Franchisors must disclose only those pre-opening obligations
which they are contractually required to provide to franchisees. Pre-opening
assistance that the franchisor intends to provide, but to which it is not
contractually bound to provide, may not be included. Accordingly, this disclosure must begin
with the following sentence: [e]xcept as listed below, (franchisor)
need not provide any assistance to you. Franchisors must make comprehensive
disclosures regarding advertising, including: 1) the type of media in which
the advertising may be distributed; 2) whether the media coverage is local,
regional or national in scope; 3) the source of the advertising (e.g.,
in-house or advertising agency); 4) the conditions under which franchisees
are permitted to use their own advertising; and 5) if applicable, the manner
in which the franchisee advertising council operates and advises the
franchisor. Franchisors must make specific disclosures regarding local or
regional advertising cooperatives, including: 1) how the area and/or
membership of the cooperative is defined; 2) how franchisees contributions
to the cooperative are calculated; 3) who is responsible for administration
of the cooperative; 4) whether cooperatives must operate from written
governing documents and whether the documents are available for review by
franchisees; 5) whether cooperatives must prepare annual or periodic
financial statements and whether such statements are available for review by
franchisees; and 6) whether the franchisor has the power to form, change,
dissolve or merge cooperatives. Franchisors must disclose information about
advertising funds they administer, including: 1) the basis upon which
franchisor-owned outlets contribute to the fund; 2) whether franchisees
contribute at a uniform rate; and 3) the percentages of the fund spent on
production, media placement, administrative and other expenses. Franchisor
must also disclose whether they are obligated to advertise in the area in
which the franchise is to be located and the percentage of funds used for
advertising that is principally a solicitation for the sale of franchises.
Franchisors are required to disclose whether franchisees must buy or use
electronic cash registers or computer systems. If there is such a
requirement, the franchisor must describe in non-technical language: 1) the hardware components; 2) the software
program; and 3) whether such hardware and software are proprietary property
of the franchisor, an affiliate or a third party. If the hardware or software
is not proprietary, the franchisor must disclose: 1) whether the franchisee has
any contractual obligation to upgrade or update the equipment, and if so, any
limitations on the frequency and cost of such obligation; 2) how it will be
used in the franchise; and 3) whether the franchisor has any independent
access to information or data in the system. The new Guidelines expand
disclosure regarding site selection procedures to include the factors
considered by the franchisor in site selection or approval. In addition, a
copy of the table of contents of the franchise Operating Manual must be
included in the offering circular unless the prospective franchisee will view
the manual before purchasing the franchise. |
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Item 12: |
Territory. The exact territory or
exclusive area, if any, to be granted by the franchisor to the franchisee
should be disclosed, as well as the right to adjust the size of this
territory in the event that certain contractual conditions are not met, such
as the failure to achieve certain performance quotas. The right of the
franchisor to establish company-owned units or to grant franchises to others
within the territory must be disclosed. A detailed description and/or map of
the franchisees territory should be included as an exhibit to the franchise
agreement. In addition to disclosing whether it has established or may establish
additional franchised or company-owned outlets which may compete with
franchisees outlets, the franchisor must disclose whether it has established
or may establish other channels of distribution under its mark. The
franchisor must disclose the conditions under which it will approve the
relocation of a franchise or the establishment of additional franchises. In
addition, a franchisor must disclose whether it or an affiliate operates or
has plans to operate another chain or channel of distribution under a
different trademark to sell goods or services which are similar to those
offered by the franchise. If the franchisor operates competing systems, it
must also disclose the methods it will use to resolve conflicts between them
regarding territory, customers and franchisor support. If the principal
business address of the competing system is the same as franchisors, it must
also disclose whether it maintains separate offices and training facilities. |
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Item 13: |
Trademarks. Franchisors need only
disclose the principal trademarks, rather than all trademarks, to be licensed
to the franchisee. If a principal trademark is not federally registered,
franchisors must include a statement that [b]y not having a Principal
Register federal registration for (trademark), franchisor does not
have certain presumptive legal rights granted by a registration. |
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Item 14: |
Patents,
Copyrights and Proprietary Information. If the
franchisor claims proprietary rights in confidential information or trade
secrets, it must disclose the general subject matter of its proprietary
rights and the terms and conditions under which they may be used by the
franchisee. |
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Item 15: |
Obligation
TO Participate in the Actual Operation of the Franchised Business. Franchisors are required
to disclose obligations arising from its practices, personal guarantees, and
confidentiality or non-competition agreements. |
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Item 16: |
Restrictions
on What the Franchisee May Sell. In this section the franchisor must disclose any
special contractual provisions or other circumstances that limit either the
types of products and services the franchisee may offer or the types
or location of the customers to whom the products and services may be
offered. |
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Item 17: |
Renewal,
Termination, Transfer and Dispute Resolution. The disclosures must be presented in a
prescribed tabular form. The table must contain abbreviated summaries
regarding 23 specific categories with references to relevant sections of the
franchise agreement. Preceding the table, the offering circular must state: [t]his
table lists important provisions of the franchise and related agreements. You
should read these provisions in the agreements attached to this offering
circular. |
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Item 18: |
Public
Figures.
Any compensation or benefit given to a public figure in return for an
endorsement of the franchise and/or products and services offered by the
franchisee must be disclosed. The extent to which the public figure owns or
is involved in the management of the franchisor must also be disclosed. The
disclosure is only required if a public figure endorses or recommends an
investment in the franchise to prospective franchisees. Consequently,
franchisors need not disclose franchisees rights to use the names of public
figures who are featured in consumer advertising or other promotional
efforts. |
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Item 19: |
Earnings
Claims.
If the franchisor is willing to provide the prospective franchisee with
sample earnings claims or projections, they must be discussed in Item 19. |
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Item 20: |
List
of Franchise Outlets. A full summary of the number of franchises sold, number of
operational units, and number of company-owned units, including an estimate
of franchise sales for the upcoming fiscal year broken down by state. The
names, addresses, and telephone numbers of franchisees should be included in
this Item. With the exception of the list of franchise names, addresses, and
telephone numbers, franchisors must disclose all information required by this
Item in tabular form. The franchisor must disclose the number of franchised
and company-owned outlets sold, opened and closed in its system as of the
close of each of its last three fiscal years. Operational outlets must be
listed separately from those not opened, and disclosure must be provided on a
state-by-state basis. The franchisor may limit its disclosure of the
franchisees names, addresses and telephone numbers to those franchised
outlets in the state in which the franchise offering is made if there are 100
outlets in such state. If there are fewer than 100 in the state, the
franchisor must disclose the names, addresses and telephone numbers of
franchised outlets from contiguous states and, if necessary, the next closest
states until at least 100 are listed. For the three-year period immediately
before the close of its most recent fiscal year, the franchisor must disclose
the number of franchised outlets which have: 1) had a change in controlling
ownership interest; 2) been canceled or terminated; 3) not been renewed; 4)
been re-acquired by the franchisor; or 5) otherwise ceased to do business in
the system. The franchisor must disclose the last known home address of every
franchisee who has had an outlet terminated, canceled, not renewed, or who
otherwise voluntarily or involuntarily ceased to do business under the
franchise agreement during the most recently completed fiscal year end or who
has not communicated with the franchisor within ten weeks of the application
date. In addition, the franchisor must disclose information about
company-owned outlets that are substantially similar to its franchised
outlets. The same table may be used for both franchised and company-owned
outlets so long as the data regarding each is set out in a distinct manner. |
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Item 21: |
Financial
Statements.
The franchisor must include its audited balance sheet for the last two fiscal
years. Audited statements of operations, stockholders equity and cash flow
are required for the franchisors last three fiscal years. If the most recent
balance sheet and statement of operations are as of a date more than 90 days
before the application date, the franchisor must also include an unaudited
balance sheet and statement of operations for a period falling within 90 days
of the application. If the franchisor does not have audited financial
statements for its last three fiscal years, it may provide either 1) an
audited financial statement for its last fiscal year and, if the audit is not
within 90 days of the application date, an unaudited balance sheet and income
statement for a period falling within 90 days of application; or 2) an unaudited
balance sheet as of the date within 90 days of the application and an audited
income statement from the start of its fiscal year through the date of the
audited balance sheet. |
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Item 22: |
Contracts. A copy of the franchise
agreement as well as any other related documents to be signed by the
franchisee in connection with the ownership and operation of the franchised
business must be attached as exhibits to the UFOC. |
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Item 23: |
Receipt. Franchisors are required to provide two
copies of the Receipt in the offering circular, one to be kept by the
prospective franchisee and the other to be returned to the franchisor. The
franchisor must disclose the name, principal business address and telephone
number of any subfranchisor or franchise broker offering the franchise in the
state. The Receipt must contain an itemized listing of all exhibits to the
offering circular. If not previously disclosed in Item 1, the franchisor must
disclose the name(s) and address(es) of its agent(s) authorized to receive
service of process. |
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ABOUT THE PRESENTER
Andrew
J. Sherman is a Capital Partner in the