The UFOC
The Uniform Franchise Offer Circular (UFOC) is a format for disclosing franchisor information to prospective franchisees. The purpose of the UFOC is to protect the public by providing information about the franchise company.
The UFOC format was adopted by the North American Securities Administrators Association (NASAA) in 1993, which was approved by the Federal Trade Commission (FTC) in 1995. The "registration states", which require franchisors to use the UFOC format (versus the FTC Rule format) include, California, Illinois, Indiana, Maryland, Minnesota, New York, North Dakota, Rhode Island, South Dakota, Virginia and Washington. Because the registration states do not accept the FTC Rule format which is less stringent than the UFOC format, the usage of the UFOC format is most widely used. The FTC requires that a UFOC or FTC disclosure document be used in all non-registration states.
There are 23 categories of information that must be provided by the franchisor to the prospective franchisee at least 10 business days prior to the execution of the franchise agreement. These categories include:
Cover Page
- The Franchisor, Its Predecesors and Affiliates
- Business Experience
- Litigation
- Bankruptcy
- Initial Franchise Fee
- Other Fees
- Initial Investment
- Restrictions on Sources of Products
- Franchisee's Obligations
- Financing
- Franchisor's Obligations
- Territory
- Trademarks
- Patents, Copyrights, and Proprietary Information
- Obligation to Participate in the Actual Operation of the Franchised Business
- Restrictions on What the Franchisee May Sell
- Renewal, Termination, Transfer, and Dispute Resolution
- Public Figures
- Earnings Claims
- List of Franchise Outlets
- Financial Statements
- Contracts
- Receipt
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